Despite unexpected rate increases in 2013, the special events insurance market won’t experience much change in the coming months—at least not when it comes to pricing. Industry trends in general, meanwhile, continue to evolve at a rapid pace.
Big losses in 2012—including the now-infamous stage collapse at the Indiana State Fair—led to special events pricing hikes last year. “We received the bulk of the rate increases in mid- to late-2013, which was a surprise,” says Brigitt Whitescarver, program manager for special events and entertainment risks at Gales Creek Insurance Services. “The market had stayed fairly constant for four to five years—we hadn’t seen any rate increases to speak of.”
In 2014, it’s back to the status quo. “For the most part, the pricing has gone up minimally for special events,” says Bob Battaglia, assistant vice president of commercial lines at Philadelphia Insurance Companies. “Since many of these accounts are small in premium size, they’re probably not going to see any rate changes at all, because most of them are minimum-premium events. Larger events are a different matter, especially if there is loss activity.”
Ron Norton, senior vice president of leisure at K&K Insurance, agrees. “We see some increase in rate, but not a material difference from 2013 unless you’re dealing with adverse loss history,” he explains. “Loss experience drives rate change.”
Contact sports are one example of a class with potential for increases. “Because of the heightened awareness centered around concussions, sporting events that have historically had a higher rate of concussion-related injuries may be faced with some rate increases, coverage restrictions or both,” says Mark Beck, senior vice president of mass merchandising at K&K Insurance. “Tackle football at any age level is likely to see the most changes in this area.”
But with those exceptions in mind, expect pricing to remain steady through the year. “We’ve got some renewal indications that have come up on one of the larger RPGs in the industry, and it’s same as last year,” Whitescarver says. “We’re not anticipating significant changes for 2014.”
On the Horizon
Whitescarver says she’s noticed more offers coming from surplus carriers and more exclusions, as well as increasing deductibles or deductibles added to policies where they didn’t show up before. Norton says to keep an eye on the trend of increasing event cancellation requests.
“Other than weddings, most smaller-event organizers are less likely to invest in an event cancellation policy,” Beck adds. “However, as the events get larger and the financial exposure grows, they’re more likely to seek cancellation coverage to protect their investment.”
In the shadow of last year’s Boston Marathon bombings, terrorism has also become a greater concern for special events insurers. “Any event with crowds, whether it’s a race or a parade, poses underwriting concerns,” Battaglia says. “Crowd control and the security measures associated with it need to be carefully reviewed.”
But none of that means the special events market is floundering. Quite the opposite—the market has developed significantly as the definition of “special event” expands to include more and more variations on traditional activities—the 5K races of the past, for example, have mutated into mud runs, color runs, zombie runs and more.
“Even in a down economy, the number of events continued to grow,” Battaglia says. “It’s not only that communities don’t want to cancel their traditional holiday parade, but also that new activities pop up all the time. That gives us the opportunity to write more business. Our book grows each year anywhere from 12 to 14%.”
For special events sales strategies, visit IAmagazine.com daily and keep an eye on upcoming issues of Markets Pulse.
Jacquelyn Connelly is IA assistant editor.