As an event insurance specialist, it always surprises me that it takes a disaster such as the recent fallout from the Icelandic volcano eruption to force many in the events industry to focus upon the importance of adequate insurance protection. Although not impossible to cover a pre-existing circumstance (a standard policy exclusion), such cover will always be considerably more expensive than normal.
Whereas the rate for, say, an indoor congress/exhibition would be less than one per cent of the value in ‘normal’ circumstances, there was a recent example where an underwriter quoted for and secured the business for quoting a rate of five per cent to include the volcanic ash risk. This I think emphasises the importance of effecting the right cover as soon as the contract with the venues has been exchanged.
Foot and mouth, 9/11 terrorism, petrol crises, swine flu, avian flu, and, the volcanic eruptions have all impacted upon the events industry.
The insurance market is currently dealing with claims resulting from air flight restrictions due to volcanic ash. As frustrating as this will be to any event organiser or meeting planner, whose speakers, artists, delegates or exhibitors have been prevented from reaching their destination, it is surely a comfort to those companies that they can at least obtain compensation from having effected the right type of insurance protection.
Under a cancellation policy, it is not possible to ‘insure a building when it is burning’, or any other pre-existing circumstance. The recent spate of claims in respect of problems caused by the volcanic ash will be for organisers who had the foresight to insure as soon as their exposure commenced and prior to the eruption occurring. As is often the case when disaster strikes, cover is requested ‘after the horse has bolted’; when it is too late.
‘The main message is that cancellation cover should be put in place as soon as the venue contract is signed and the client’s exposure begins.’
It is sometimes assumed, incorrectly, that cover is only available if there is a total cancellation. Very often claims are paid for costs necessarily incurred so that an event can be kept alive and proceed.
This is an integral part of the cover which is often not understood, but is highlighted by the recent Icelandic ash situation there, it has been necessary for underwriters to pay additional travel costs for artists or speakers to be rerouted to their destination via an alternative mode of transport.
The main message here is that cancellation cover should be put in place as soon the venue contract is signed and the client’s exposure begins. Taking action to insure early does not cost any more, but it could prove expensive not to.
Event insurance specialists, are often seen as the exploiters of bad news, but would in my view be justifiably criticised if we did not emphasise the importance of insuring early, all for the right reasons. There are many unforeseen risks, most of which can be insured providing that a pre-existing circumstance has not arisen.
Finally, it should also be borne in mind that sometimes underwriters will agree to “write back” a circumstance which is deemed to be pre-existing. The Icelandic volcano incident is a good example whereby quotes can be obtained to include this risk, but subject to payment of an additional premium.
Waller can be contacted via the editor.
