With events being cancelled left, right, and centre to avoid the spread of the novel coronavirus in Canada, there is good news and bad news for clients wanting event cancellation insurance.
The good news is that insurers are probably not raising prices because of the COVID-19 pandemic.
“Insurers do not see themselves having exposure to COVID-19 when writing event cancellation insurance,” said Ben Rossington, Toronto-based entertainment and sports account manager at Hub International.
This is because of the bad news: event cancellation policies normally exclude communicable disease.
“I don’t feel they will price for communicable disease in the future unless there is public pressure to say, ‘We would like to see this covered in all future policies,’ and then they will obviously price for it then,” Rossington said Tuesday in an interview.
Many clients now cancelling events due to COVID-19 won’t have coverage for the event cancellation. They never contemplated such a scenario in the first place, and only now do they realize they can’t claim it, said Rossington.
Major events cancelled because of COVID-19 include the Risk and Insurance Management Society (RIMS) conference in the United States and the Juno Awards.
What about this summer’s Olympics in Japan? As of Wednesday, the Tokyo 2020 games were still on, but the International Olympic Commission does have event cancellation insurance.
Canadian Underwriter asked Olympics insurer Munich Re how much coverage is available and whether it excludes communicable disease. Munich Re did confirm it is providing coverage, but it is not releasing details about the policy – or whether it covers pandemics – for confidentiality reasons.
“I would imagine that the majority of cancellation policies that were ever issued prior to COVID-19 did not factor this potential threat to be covered,” Rossington told Canadian Underwriter, commenting in general on events and not specifically on the summer Olympics. “Occasionally we see in the insurance world something that arises that was never, ever predicted [to] impact our business or our lives. This is one such example.
“In 2019, if you were putting on an event, you had the opportunity, potentially, to include communicable disease as a covered peril. Unlike optional buy-back options such as terrorism or active shooter, a pandemic such as COVID-19 was not a peril that was seriously contemplated by event organizers.”
Insurers were already increasing rates for cancellation insurance, but that was independent of the current COVID-19 pandemic, said Rossington. “MGAs and insurers offering event cancellation have indicated to us here in Canada that the event cancellation as a product, as a whole globally, had some significant exposures on event cancellations around the world, particularly adverse weather events. To offset that, they have increased their rates here in Canada.”