Best's Review



Last Word: Running Into Risks

New exposures are racing into the world of marathons and road running events.
  • Lori Chordas
  • October 2016
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More than 50,000 runners and walkers are expected to lace up their sneakers and hit the pavement for this year's TCS New York City Marathon on Nov. 6.

Modern marathons are named for the location of an ancient Athens battle from which a Greek soldier is said to have run 140 miles to get help from Sparta. While the art of racing has remained relatively the same since that legendary test of endurance in 490 B.C., the risks have changed dramatically.

Typical exposures--sprained ankles, exhaustion--are now joined by terrorism, weather, civil unrest and even cyberattacks in creating hurdles for today's organizers.

"We're also seeing a rise in communicable diseases like Zika," said Dan Burns, president of specialty risk underwriter PFS. "With news of outbreaks in areas like Miami, it might be inadvisable, according to health organizations, to put thousands of runners in an exposed environment and risk possible exposure to something like Zika or other diseases that are nearing pandemic stages."

Risks--new and old--are signaling the need for a variety of insurance coverages, such as general liability, directors and officers, medical malpractice for medical volunteers and event cancellation, he said.

"There isn't a week that goes by without some event being cancelled, postponed or relocated," Burns added. "The primary concern when dealing with a marathon is that it's an outdoor event, and weather is the No. 1 cause of a cancelled race. It's something completely outside your control and often offers little notice."

That's something New York Road Runners, the nonprofit group that organizes the annual TCS New York City Marathon, knows all too well. In 2012, the event was cancelled for the first time in its 45-year history--due to the effects of Hurricane Sandy. More than 47,000 runners were expected to take part in the race.

Cancellation of the world's largest marathon generated $18.9 million in losses for New York Road Runners. However, those losses were significantly lessened thanks to a $15 million insurance payout from Lloyd's syndicates for the cancelled event, according to news reports.

The 2013 Boston Marathon shined a spotlight on another coverage need: terrorism insurance. Three people, including an eight-year-old boy, were killed and more than 260 were injured after multiple bombs exploded as runners finished the race.

"That was a tragic example of an event that can affect the way these types of risks are covered," said Elizabeth Seeger, contingency line underwriter at specialist insurer Hiscox. "Today, any event with a large crowd in attendance, whether located in a single stadium or along a large outdoor course where security controls would be far more difficult to enforce, could be considered a target. Such attacks are obviously a concern for event organizers, and insurers will look for ways to respond to these concerns."

New risks, such as cyber liability, also have marathon organizers running for cover, said Michael Iser, vice president of running and special events at Associated Agencies Inc., a brokerage firm based in Rolling Meadows, Illinois. "Today, third parties often provide race enrollments and/or collect funds online. What happens if their systems get hacked? Both race organizers and third parties could face potential exposures."

"Risk has always been part of marathons and races, but new exposures have heightened the awareness from a risk management standpoint as to all the things race organizers now need to think about," added Robert Murphy, sports and events practice leader for Marsh. "Who would have thought someone would put bombs in trashcans like they did in Boston? That changed the whole dialogue, and now trashcans have been removed from most races, manhole covers are being bolted down, course access points are being changed and more.

"One thing we tell clients is, 'You can have the best insurance program in place with the best coverages, terms, conditions and limits, but you have to make sure you never have to use that insurance. The minute you do, it won't be as competitively priced the next time renewals come around,'" he said.

So far, "the rising risk environment" surrounding races, along with recent events in Boston and New York City, have had little impact on insurance costs, Iser said.

"As a broker, my job is to understand what concerns my clients have," he said. "I often walk around races looking at things from a different perspective. One thing I notice is that larger events generally rent a lot of equipment, such as tents and costly generators. Typically, race organizers are responsible if that equipment is lost or damaged. New race directors may not be aware of that unless they've been advised by someone and read the fine print."

Race organizers should "identify and focus on emerging risks as they begin to develop and stay ahead of the risk curve," Murphy said. "The sooner we know what risks are out there, the sooner we can manage them."

By Lori Chordas, senior associate editor, Best's Review:

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