How Pride Toronto got swept up in entertainment line’s hard market

Pride Toronto’s executive director says the organization has seen a 300% increase in its insurance premiums ahead of this month’s parade and festival programming.

This trend of higher premiums for public events is not unique to Pride Toronto; organizers of large events in Canada are seeing rate increases across the board.

That’s because the small market of insurers with capacity for such events have raised prices due to increased risk exposures, such as mass casualty events and inflationary pressures, one commercial expert shared with Canadian Underwriter.

Pride Toronto’s executive director Sherwin Modeste said the organization’s general liability insurance cost $60,000 in 2022, but the premiums have risen to nearly $300,000 this year.

“Pride Toronto, being the size that it is, definitely may have influenced that decision,” Modeste told Canadian Underwriter. “But no, there have not been major changes from our end that would warrant such a huge increase in terms of festival footprint, in terms of the number of attendees, or anything like that. This is just our general liability insurance. This does not even cover our cyber insurance.”

Pride Toronto’s insurer BFL Canada did not respond to CU’s request for comment.

Pride Toronto has been caught up in a more general trend in entertainment insurance, which is that large-event organizers are seeing dramatic premium increases in 2023 alongside other insurance challenges, one commercial broker explained. 

Challenges in entertainment insurance 

A 2023 Outlook report by Hub’s Entertainment & Sports team predicted entertainment clients would see their general liability insurance rates increase by at least 5% to 10% or more in 2023, and cyber insurance rates would also rise at least 10%.

Part of that is because insurance for large attendee-base events is specialized as it is, said Alan Hollingsworth, chief sales officer, and Ontario sports and entertainment practice leader at Hub International.

When you throw in the additional risks associated with adverse weather, mass casualty events (which have increased the need for security), and general inflationary effects, it explains why insurers have been more judicious about underwriting certain risks this year.

“A limited number of insurers have an interest in providing insurance coverage on events, and that’s everything from general liability to event cancellation, to property insurance,” said Hollingsworth. “It’s very specialized and, as a result, there are just fewer insurers involved in providing coverage in that space.”

Coverage for event cancellation in particular can be tricky to find, although even general liability capacity has contracted, Hollingsworth added.

“There’s been adverse weather, there’s been some mass casualty events that have had insurers look at these risks a little differently with respect to their comfort level in underwriting the risk,” said Hollingsworth. “Inflation has had some impact on the industry as well.”

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Such factors have combined to see clients’ premiums rise dramatically in the last year.

And while many venues and events are bouncing back after less demand over the past two years, some may struggle to find coverage for their level of risk, especially if they lack an understanding of their exposures.

The message for clients is clear: underwriters are being more meticulous about risk mitigation.

Carriers are scrutinizing their policyholders’ security and risk management protocols for handling the event safely, including event set-up, site planning, evacuation or emergency response plans and other exposures, such as the number of staff and volunteers on-site or active shooter protocols.

“It’s more rigorous today than maybe it’s ever been,” said Hollingsworth. “All of that goes into their consideration around how comfortable they are accepting the risk.”

For commercial brokers, ensuring their clients have solid risk management plans in place is imperative.

With stricter requirements and rising insurance costs, brokers can step up for their clients and carriers by facilitating further opportunities for risk mitigation. 

“Our role is to arrange the appropriate insurance coverage that would respond should something unfortunate happen, but we also look to offer support — through our risk Services team where we can — to help the organizer in advance mitigate against something happening,” said Hollingsworth. “So we really do look to play a role in risk mitigation, risk transfer.”

Feature image by iStock.com/Eli Unger