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Insuring Events Against Communicable Disease: ‘Not Impossible But Very Difficult’
Andy Sheppard/Redferns via Getty Images – The usual sight at SXSW: crowds of music fans on 6th Street
The event won’s take place this year because of fears of Coronavirus. The event’s insurance doesn’t cover the losses.
With the summer festival season approaching, Pollstar takes a look at the reality of event insurance against communicable disease, and whether it’s too late to insure now.
Pollstar reached out to Tim Thornhill, director, sales entertainment & sport at insurance brokerage Tysers, who explained that “event insurance can cover communicable disease, but it usually doesn’t cover it as standard. It is normally added at a small additional premium, which is usually a fraction of the standard event cancellation rate.”
He pointed out that “it’s not absolutely imperative for people to buy event cancellation insurance, like it is with car insurance for example,” which means promoters can forgo insurance entirely and choose to take the risk.
According to Thornhill, most large, high-budget events would take out an event cancellation policy including the communicable disease buyback. “Some events might have chosen not to take that extension,” he added.
Given the number of insurers and brokers in the market, Thornhill doesn’t have a full picture of the demographic of event organizers that have taken out communicable disease coverage. “A lot of events will be covered, but there will be a number that certainly aren’t,” he said.
As the point of contact between insurers and promoters, the brokers at Tysers have their work cut out: “It’s very busy at the moment, because we’ve got inquiries about what cover events have that are coming up in the summer. We have inquiries by people, who would like to take out the cover now, which is difficult now that the virus is already out there,” Thorhill explained, adding, “I’m not going to say it’s impossible, but it’s very, very difficult.
Which means that events, for the most part, can only hope that the fears surrounding Coronavirus will subside before the summer season commences.
Mark Metcalfe/Getty Images – Scene from Splendour In The Grass 2017
In many countries around the world, politicians are now making the decision to ban gatherings of large crowds.
Going forward, Thornhill continued, “insurers are likely to change their [risk] appetite for covering things like communicable disease because of the impact that this has had.”
Which means that insuring against virus outbreaks will become more expensive. Insurers might even create a virus-based event cancellation as a separate policy to a standard event cancellation policy in the future.
A legal expert in the UK working with live events confirmed that insurers haven’t been offering cover for communicable disease since Jan. 22 – not long after the first cases of Coronavirus had been reported, and about a week prior to the World Health Organization declaring it a public health emergency of international concern.
The lawyer, who wished to stay anonymous, confirmed that any insurance policy taken out after Jan. 22 would not cover promoters.
He explained that “if a policy is in place the event may be covered, but it will depend on a) if the promoter (or band) have added in communicable disease as a buy-in for cancellation/non-appearance insurance and b) the wording of the policy they have in place.”
The wording could determine, for instance, if a virus outbreak falls under force majeure, which is something most events are usually protected against. The declaration of an epidemic or pandemic disease may fall within force majuere and be covered by an insurance policy, or it may not, depending on the wording.
A ‘public disaster’ could trigger force majeure, as would (usually) any order coming from national governments or local authorities, or a transportation interruption. “But it very much depends what the policy says and what the level of indemnity actually is,” the lawyer explained.