MARCH 25, 2020 08:47:26 Eastern Daylight Time
Best’s Commentary: Event Cancellation Insurance Losses Amid COVID-19 Outbreak May Hinge on Contract Wordings
FOR IMMEDIATE RELEASE
OLDWICK - MARCH 25, 2020 08:47:26 Eastern Daylight Time
A new Best’s Commentary, titled, “Event Cancellation Insurers May Rethink Their Strategies,” states that losses on this line of business could have a compounding effect as carriers navigate other lines of business exposed in the pandemic, such as business interruption, directors and officers and workers’ compensation, as well as dealing with losses on assets. For example, Swiss Re has announced that it has a $250 million exposure to the Olympic Games in Tokyo, while Munich Re revealed it could have exposure amounting to hundreds of millions of euros. The postponement of the Games could have implications on insurers, depending on the individual contract terms.
Event insurance is a customized form of insurance, and every covered event is unique and policy wording can vary greatly. Limits can be as low as $500,000, and up as high as $10 million depending on the circumstances, and prices may vary as well. The insured could be an event organizer, sponsor or venue, as well as other stakeholders such as caterers, entertainers and keynote speakers.
Communicable disease is not always a covered peril and the applicability of COVID-19 is uncertain. Withdrawals by individuals from events owing to COVID-19 concerns are unlikely to be covered. Prohibitions by local municipalities of gatherings of more than 150 persons or curfews that result in cancellations also would not be covered. For events cancelled following national emergency announcements or state proclamations, event insurance could apply and insurers then would be responsible. Broader interpretations of contract language by courts, which increasingly have become tied to social inflation, is a reality that insurers have already been dealing with in recent years. Given the global impact of event cancellations, these interpretations could dramatically impact the results of event insurance providers.
To access the full copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=295713 .
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.