The Show Must Go On
Mega-global events such as the upcoming Olympics and this year’s G20 and Rugby World Cup put a spotlight on Asia-based events.
- Meg Green
- December 2019
MAIN EVENT: In 2013, a flame was lit in the 1964 Olympics cauldron at the National Olympic Stadium in Tokyo in celebration of the Japanese capital being selected to host the 2020 Olympics. A new stadium at the site is scheduled to open this month. Insurance programs for such mega events often are put in place years in advance.
Photo by Kyodo via AP Images
Asia is seeing an increasing number of sports, entertainment, music, trade show and conference events hosted for both local and international participants.
Tommy Elliot, regional director, Asia-Pacific, Circles Group, said most losses paid for event coverage are related to event cancellation, catastrophe impact and other property-related causes.
Elliot spoke with AMBestTV at Lloyd's Meet the Market conference in Hong Kong.
Following is the edited version of the transcript.
Tokyo will host the Olympics next year. Can you tell us more about the risk management and insurance program needed for such a big event?
For an event like the Olympics, obviously you have billions of dollars on the line, multiple stakeholders involved. Believe it or not, the insurance programs for something like the Olympics are planned, organized, and put in place, in some cases, even years before the event takes place.
Taking the Olympics as an example, you would have the various stakeholders, including folks like the International Olympic Committee, the local organizing committee—in this case, it would be the Tokyo Organizing Committee—and then various other stakeholders, people like sponsors, TV broadcasters. All of these folks would have a financial interest in the overall event.
It tends to be the Olympic Committee that are the folks that go in sometimes three, four years before the event to procure their insurance coverage. Then pretty much once the Olympic Committee has bought their cover, it's a bit of a mad dash for everybody to go into the market and procure coverage.
Make no mistake, it's a global placement. You'll have hundreds of millions, if not up to billions of dollars on the line, and you would have involvement from the global marketplace.
Do you see increasing insurance demands from Asia markets hosting other high profile events such as [this year's] G20 and Rugby World Cup?
Where we cut the big checks is where events get cancelled, the organizer has contractual liabilities—things like ticket refunds, loss of deposits—that’s where the earth shakes, the wind blows. That’s where we’ve had the biggest exposures over time.
With these big, big, high-profile mega-events, the insurance programs would have been put in place, in some cases, years in advance. As a result, most of those are pretty well-baked-in [by the time the events take place].
What we would say though, is in general, since we're having more and more international events come out to Asia, is we've seen an increasing demand from smaller and medium-size events around the region, places like Southeast Asia, Greater China, and more mature developed markets like Australia and New Zealand.
What are the emerging risks for sports and entertainment events, and international conferences in Asia?
The first one, it's a risk that's been around, and it continues to obviously make headlines. One that an event organizer can't ignore at this stage is terrorism and political violence insurance. There are varying degrees of risk and uncertainty within that peril across the region.
Weather is something out here that we certainly can't avoid, in Asia. Fortunately or unfortunately, we've got everything out here. We've got typhoons. We've got earthquakes. We've got tsunamis. We have extreme temperatures, snowstorms, you name it. We've got it out here. Managing those risks on a local basis is very important.
Communicable disease or pandemic outbreaks of infectious diseases, this is something that, again, can't be ignored here in Asia. Taking for example, SARS, which happened a number of years back, was one of the largest market losses for the global contingency market ever. We're always on the lookout for what the next emerging risk there could be.
The fourth area that we see is what we call nonappearance, so the nonappearance of either a key performer or artist, say, such as at a rock concert. [That can happen] even at a trade fair and exhibition level or a seminar or conference level where you have a keynote speaker who's unable to attend due to accident, death, or illness, either of the artist or keynote speaker, or of one of their immediate family members.
Particularly, as more and more Western artists continue to travel into Asia, into more and more markets, we have seen more and more issues in the nonappearance space.
Finally, in terms of the areas of risk that we see, sometimes it's the ones that you don't really think about, but that are, in some cases, the more practical ones.
For example, if you're holding a concert, and you have some very key sets and things that are coming from the previous concert city that might be in South Africa, and due to a breakdown of the airplane or issues in transport, the gear doesn't show up for the concert.
Oftentimes, the artist will have specific guidelines in terms of the equipment that they need to use. As a result, they'll say, “Look, I can't perform, because I don't have the right equipment, and it's unsafe.”
There's a whole host of factors that we look at. Some are more obvious, and some are less obvious, I guess, in that sense.
How would you describe the market conditions for events in Asia?
The risk management space for events in Asia is an evolving process and space, I would say. It depends on which markets you're in.
Of course, some of the more high profile cancellations of events in recent weeks and months, and things like catastrophes that we've seen an uptick in in the region, have definitely brought up the awareness.
Really, what we try and do is work with our brokers, who in turn, work with their clients. What we try and advise is that whilst insurance is one part of an overall effective risk management program, it can't simply be a backstop for everything that happens. You need to be able to manage your risks so your event goes ahead as planned effectively.
One of the other things that we see in terms of risk management awareness is oftentimes there's a focus in the region on the liability insurance which is arranged for an event, which—don't get me wrong—is extremely important that an event organizer has effective and adequate liability insurance in place.
Honestly speaking, we've been insuring hundreds of thousands of events across the world over the last 20 years, and less than 5% of our claims actually come from liability exposures.
Where we cut the big checks is where events get cancelled, the organizer has contractual liabilities—things like ticket refunds, loss of deposits—that's where the earth shakes, the wind blows. That's where we've had the biggest exposures over time.
How do you see terrorism risks impacting insurance demands for events in Asia?
I think Sri Lanka was an interesting one. It wasn't really on anybody's radar in terms of a risk and exposure. Obviously, it was very, very unfortunate what happened there.
New Zealand, again, is another place that people would have never thought that you would have an issue. What it's shown is that, unfortunately again, none of us are safe in this day and age.
Hong Kong and Singapore, again, have always been seen as beacons within the region, as safe havens, and as somewhere where an issue like this couldn't happen. When you speak to some of the security and intelligence folks around the region, they will tell you that things could have potentially happened. They just happen behind the scenes.
It is something that we all have to be conscious of and aware of. That awareness, and then how to manage and mitigate those risks, is something that we're working on with our brokers and clients on a daily basis.