COVID-19 dragged the events industry off a cliff, and the climb back to the top has still got a long way to go.
Governments across the globe have earmarked dates to do away with limits on social contact and it’s these dates the entire events sector is eagerly awaiting.
The pent-up demand to host and attend events is palpable and in recent weeks we have begun to see a noticeable uptick in the number of enquiries coming through to our contingency team.
This is especially the case for smaller events that do not require the same lead time or upfront investment as flagship gatherings such as Glastonbury or Coachella.
Supporting the transition back to full scale live events
The idea is to let several events go ahead in tightly controlled environments, so organizers and authorities can work out the best way to hold them safely in the future. Governments will be offering compensation should a pilot event be cancelled due to public health reasons.
Many people are clamouring for a comprehensive support package from the government in terms of providing backstop contingency cover for future events. In addition, any such cover would probably require event organizers to have their own insurance in place to respond in the first instance.
As brokers and their clients seek to arrange cover for their forthcoming events, they will have to bear in mind the significant impact COVID-19 has had on the contingency market.
Changing market dynamics
When the first lockdowns came into force in early 2020, scheduled events simply disappeared from the agenda. Enquiries for cover fell away to nothing and plans for live events were cancelled or shelved.
Some carriers took COVID-19 as their cue to leave the market, although there were also new entrants who saw it as an opportunity to capitalize on hardening rates.
At the moment, the small number of risks being placed in the market means it is difficult to tell just how much rates have hardened. But that will become more apparent in the coming months as volumes return to something more like normal.
Given the scale of recent losses and the historically soft nature of the pre-pandemic market, it is inevitable the price rises will be significant.
In addition, policyholders should expect exclusions for COVID-19 and communicable diseases to be standard. This cover will still be available if it is specifically required, although it will come at a cost and from a reduced number of carriers.
In truth, communicable disease exclusions were standard in the contingency market before the onset of COVID-19, although there will be more focus on them in its aftermath.
Where the difference between the pre and post pandemic market will be more pronounced is in the ability to find underwriters prepared to take on an entire risk. This issue will be more prevalent for larger events and brokers may find themselves having to engage with numerous markets to place the full cover required, when a single carrier might have offered it in the past.
Heightened awareness of risk
In a devastatingly short period of time, COVID-19 has shown the debilitating power of pandemics to bring live events, and economies more generally, to a halt.
Previous public health issues such as Middle East respiratory syndrome (MERS) and Severe acute respiratory syndrome (SARS) never delivered the widespread disruption they threatened. This cannot be said of COVID-19 and it has significantly heightened the awareness of the cancellation risk faced by the events sector.
This more practical understanding of cancellation risk should increase the penetration of contingency insurance and grow the overall size of the market in the coming months and years.
Even if event organizers decide not to buy cover, risk management considerations will be much higher up their agenda and they will be more open to discussions on the subject as they plan their event.
This extra interest should also act as a catalyst for brokers to strengthen existing client relationships and to develop new ones. It may also encourage clients to be more active in assessing and understanding the exact nature of the wordings and definitions in their policies. Such engagement would be positive for the market and minimize unexpected outcomes in the event of a loss.
In whatever way brokers and their clients interact with the contingency market going forward, they can rest assured it will be there to offer them the cover they need. Underwriters are just as desperate as they are to see live events back on the daily agenda.