Assemble live event coverage

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The coming summer months promise to bring a resurgence of festivals, concerts and community events after the COVID-19 pandemic effectively shut down the live entertainment industry for the past two years.

Pent-up demand for in-person events is fueling cautious optimism among entertainment and event specialists, who say they are busier than ever trying to secure adequate coverage for their customers.

“The market is absolutely bouncing back and it’s exciting to see,” said Debbie Spinner, head of underwriting in the Entertainment division of Alive Risks, part of Ryan Specialty Underwriting Managers.

But returning to normalcy from pre-pandemic events will be a slow process for the insurance market, according to entertainment experts. Market conditions for medium and large events were extremely difficult prior to the onset of the pandemic and with little to no event activity for carriers and a slew of claims to pay, the hardening of the market has accelerated.

Several carriers have exited the market altogether and those that remain have reduced capacity, leaving agents and brokers scrambling to do business with fewer markets to choose from.

Those looking for coverage for big events find markets with lower limits, higher rates and strict underwriting requirements, experts say.

“On average, we’re seeing rate increases for almost all coverages as insurers need additional premiums to deal with rising losses and expenses,” said Hub International’s “2022 U.S. Insurance Market and Rate Report. “. Rates increase on average by 5% to 20% or more, depending on the industry.

The event cancellation and contingency market has been hardest hit, said Christian Phillips, president of emergency practices at Paragon Insurance Holdings. The pandemic has caused more than $6-8 billion in losses related to event cancellations. Overall, coverage has become much more restrictive, and there are no options available to purchase coverage for communicable diseases, Phillips said.

“The entire market has been hit hard, whether you are a small event organizer or a large event organizer – everyone has been affected equally,” he said.

Carriers are looking at all event risks much more closely than they were before COVID, said Martin Ridgers, president of MKR Specialty Insurance Brokerage, an independent agency in Long Island City, NY Experienced event planners who can demonstrate that they are prepared in terms of safety and security will be prioritized by underwriters.

“It’s a tough market and underwriters will ask questions and pass on risk,” he said.

Spinner said the transfer of risk has become extremely important for carriers for events of all sizes, which includes requiring sellers or third parties to have their own insurance that indemnifies the insured.

“It’s basically like a puzzle…and every piece of that puzzle has to be taken out,” she said.

That means a lot more work and time spent on policy quotes for agents and brokers, and time is of the essence when it comes to getting coverage, Spinner said.

“We are seeing an influx of new business submissions, and everyone wants to see that, but unfortunately underwriters are extremely overwhelmed with the volume of business coming to their desks and now the challenge is to transform those quotes to the insured on time,” he said.

Transmitted Disease

Before the pandemic, event planners could easily purchase event cancellation coverage with an optional communicable disease endorsement, usually for an additional premium, Phillips said, but that’s no longer the case as companies face “dramatic” losses.

“What happened after COVID is that there’s no option now to buy it because obviously COVID is an ongoing thing, and everyone knows that…it would be almost like saying “this building has smoke coming out of it – would you like to insure it with a fire policy?” Said Phillips.

Aristotle Moulopoulos, production specialist in Alive Risk’s Entertainment division, said companies not only exclude coverage, but require “written confirmation that the insured understands there is no coverage for the COVID or Communicable Diseases” when quoting event cancellation coverage.

“It’s just another protection for the carrier because it’s an uninsurable risk right now,” he said. “They want transparency with the assurance that they are not trying to sell a misleading product.”

While some policyholders are asking for coverage to protect them against COVID-related cancellations, most understand this is “an impossible placement,” Moulopoulos said.

At some point, insurers might consider insuring communicable diseases with a COVID exclusion, Moulopoulos said, but he doesn’t see that happening as long as the virus is a widespread problem.

Besides COVID, there are other exposures that make underwriters nervous in the event cancellation market, such as extreme weather and security threats.

The pandemic has tipped the scales for companies that were already reducing capacity and limiting larger events, Phillips said. For smaller events, underwriters have adapted with new policy forms that specifically exclude communicable disease coverage, new rates and deductibles, and the market is better able to absorb losses.

“I would say the market right now is struggling from a capacity perspective, especially with big events.

Obviously, smaller events are much easier to manage,” he said. “When you get to medium and larger events, it’s very difficult to get 100% of the limit placed, especially for certain types of events.”

However, Phillips noted, some of the markets that left are replaced by a few companies that held back when rates were low.

“For many years we were in a weak market within our industry so now was the perfect time to enter this industry as rates increased massively, coverage shrank and capacity was reduced” , did he declare.

Risk management, essential components of education

Security has always been a major underwriting item in the event space, Alive Risk’s Spinner noted, but it’s more important than ever amid the current tough market and COVID-19.

Subscribers have tightened their subscription requirements, but these vary depending on the type and size of the event.

Underwriters want detailed information about event security and contingency plans, as well as COVID protocols in place, even if COVID is not a covered exposure, Spinner said. Vaccine or COVID testing requirements are easing, but underwriters still want to know if proper health and safety precautions are being taken to minimize overall event exposure.

“They want to make sure that [the insured] trying to create a safe and well-run event,” she said.

The MKR Specialty Ridgers said event organizers have learned “more than they probably want to” over the past two years about how to make their events safer, and the good news is that they’ve taken a number of steps to improve in this area.

Risks that can demonstrate they are experienced and well organized will get faster responses from underwriters, better insurance terms and better coverage, he said. It is also up to brokers to represent their client appropriately.

“Put [the policy submission] together as soon as possible and find out what policyholders are concerned about,” he said. “Don’t just throw it at underwriters hoping they can give you an answer – you need to go through the questions underwriters have.”

Brokers also need to take the time to read and clearly communicate the terms and conditions of their clients’ event policies, especially since the policies aren’t as comprehensive as they once were, Ridgers said.

“Underwriters are going to include terms that take them away from risk,” he said.

Paragon’s Phillips said he found it helpful to bring the event organizer and underwriter together so they could peruse the policy and ask questions.

“Then you have much happier customers because if there’s a claim, they know if they’re covered or not, and things will go much, much smoother,” he said. he declares.

It’s up to agents and brokers to be the trusted advisor and educate their clients on what’s needed to ensure effective and affordable coverage, Spinner said.

“With a lot of these events, especially the big ones, it will take a lot of information to get insurance,” she said. “Ultimately, these requirements are there to protect policyholders and help them run a safe event. And, by doing all of this, it can help them get a better quote and rate.

Topics
COVID-19 Market Trends

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