Do Your Special Events Clients Have Terrorism Coverage?

Between the wildfires and earthquakes out west, Hurricanes Harvey, Irma and Maria, and a rash of violent acts, 2017 was “certainly an interesting year for the event insurance industry,” says Christian Phillips, contingency underwriter at Beazley.

Heading into the New Year, Phillips expects rate increases for special events policies in cat-exposed, wind-prone areas, but also regarding terrorism-related coverages “in view of the frequency,” he explains. “We’re seeing a big increase in terrorism across the globe. Fortunately, there hasn’t been the severity of a 9/11, but there’s certainly been a lot more frequency.”

From the Manchester Arena bombing at an Ariana Grande concert last spring to the mass shooting at the Route 91 Harvest music festival in Las Vegas in October, “concerts have become a prime target because you’ve got a large gathering of people,” Phillips says.

As the numbers rise, so does demand for event insurance that incorporates terrorism coverage. “We’re definitely seeing an uptick,” Phillips says. “After an event, we always see an increase in purchases, an increase in inquiries, and we also see clients that have already bought cover that didn’t purchase the terrorism asking if they can then add terrorism to their policy.”

Generally, a special events base policy form excludes terrorism. “But there’s always an option to buy it back,” says Phillips, who adds that determining the best coverage option for your client can be “a bit of a minefield—the client needs to make sure they get good, quality information and understand what they’re purchasing.”

A “lone wolf” attack like the Las Vegas shooting, for example, wouldn’t be covered under most terrorism insurance policies, because the shooter wasn’t affiliated with an official terrorist organization. And consider that some policies include time and distance restrictions; some provide cover for threats and not just actual acts; and some may include riots, strikes and civil commotions within their definition of “terrorism,” while others do not.

The latter consideration opens the door to a wide range of related issues. “If law enforcement is required to attend to a disturbance that ultimately takes them away from their security post at an event, the event’s impacted even if it’s five miles away—they may no longer fulfill the requirements of their permit if they haven’t got the right security,” Phillips explains. “Alternatively, a civil commotion could create an access issue.”

These are all potential scenarios you should discuss with your client before securing special events coverage. “Insureds need to be very aware of what they’re purchasing and what their policy does for them, because there is a multitude of different coverages out there,” Phillips says.

Outside terrorism-specific coverages and cat-prone areas, however, Phillips says special events insurance remains, in general, “a very soft market.” Heading into 2018, he expects that “pricing in the rest of the market will probably stay the same.”

“We have plans to keep rate levels very steady for the New Year,” confirms Stephanie Waldron, senior vice president of the Events and Attractions Division at K&K Insurance Group, Inc., which primarily writes general liability and excess coverage for larger special events.

Similarly, Mark Beck, senior vice president of the Mass Merchandising Division at K&K Insurance Group, Inc., which offers coverage for smaller events like craft shows and weddings, doesn’t anticipate “any movement upward” in pricing for his segment.

“The exposures aren’t as great the smaller the event, typically speaking, so we’re constantly assessing the price ranges in the marketplace,” Beck explains. “It could be that certain sized events may be priced a little more competitively, but it really depends on the exposures and attendance.”

And that can be a tough conversation in a space where “the client is always looking at the cost,” Phillips points out. “What’s cheap doesn’t always do it for you. You want a competitively priced product that is also broad in coverage.”

Jacquelyn Connelly is IA senior editor.