When considering the two elements of the special events insurance market—property-casualty and contingency—there's been a real variance in how the market has been impacted.
Fairs, festivals, outdoor and indoor concerts are all a huge part of American life. However, the past year has altered this landscape immeasurably. COVID-19 has pummeled the event industry hard. “We went from thriving to crippled and that's hard," says David Cloward, industry executive and consultant for the live entertainment insurance industry and board director of the Event Safety Alliance.
Over the past year, live concerts across the world were canceled. Sports teams went on hiatus only to eventually return to find themselves playing in a bubble. Wimbledon was canceled and the 2020 Tokyo Olympics Games may not take place at all, despite being rescheduled for a year later. As a result, the special events industry experienced substantial losses.
“The market can only be described as 'very quiet,'" says Spencer Batt, executive vice president and chief marketing officer, American Specialty Insurance & Risk Services, Inc., an affiliate of Arrowhead General Insurance Agency. “Most events aren't taking place or, if they are, they are taking place virtually or with very limited attendees."
But when considering the two elements of the special events insurance market—property-casualty and contingency—there's been a real variance in how the markets have been impacted.
“The contingency side of the special events market, including event and weather cancellations, has taken a bath as a result of the COVID-19 pandemic," says Scott Carroll, broker and underwriter, Take1 Insurance. “That side of the special events market is going to be in a world of hurt for quite some time."
On the other hand, Carroll believes the casualty side of the market is still vibrant. “We haven't received many real requests for coverage on the annual special events or the short-term special events side just because they're not in need right now, but they are forecasting forward," Carroll says.
After a decade of soft rates, the rates are hardening. “Especially on the contingency side, the market has taken such a bad hit, we anticipate that rates are going to go up quite dramatically," Carroll says.
On the p-c side, Carroll doesn't think there'll be such an increase in rates. “You're going to see some increase in the general liability side, but I don't think it's going to be a dramatic, overwhelming rise," he adds.
“Capacity has certainly tightened up, but it is hard to tell the extent, since there are so few events currently taking place," Batt says. “We will know much more once events start occurring again regularly."
While most players in the special events market have been impacted by the pandemic, there is a sense of optimism. “As a result of the vaccine, I think you'll see an increase in more live events being scheduled," Carroll says. “I think you'll see the events market come back and as the market gets stronger, you'll see players come back into it."
Echoing that sentiment, “anybody that's in this industry will tell you that when this pandemic is over there is going to be a renaissance of special events," Cloward says. “People have been cooped up for so long and want to go see concerts and be with people."
However, in terms of the market offering communicable disease coverage, this is another matter. “I think this pandemic shook the world into realizing that something like this can shut down an entire industry," Carroll says, suggesting that capacity is going to be either very limited or very expensive.
In the last 12 months, special events took place literally every day—albeit virtually—throughout the country and smaller in-person events do still occur; however, the event space is ultimately dependent on COVID-19 being contained to be able to begin to grow again. “Once there is an easing of restrictions and events begin to occur more regularly, there are certainly opportunities for agents to place more special event policies," Cloward says.
Olivia Overman is IA content editor.
This article was published in the March 2021 issue of Independent Agent magazine.