The entire world is fighting against the contagious coronavirus pandemic. Major festivals experienced cancellations, and countries like Italy are facing partial lockdowns. The EDM industry is facing an unexpected enemy that we hope is defeated soon, but while it is around…
How is this World Health Emergency affecting promoters?
The most cautious ones have their backs covered. This is probably one of the worst moments for event cancellation insurance policy providers as the claims are growing really fast.
According to Billboard’s study, insurers and promoters tried to predict the development of the coronavirus. Some of them succeeded and the vast majority failed. Now that the outbreak of COVID-19 is wreaking havoc around the world, it is too late for promoters to add this kind of insurance.
As a rule, cancellation insurance policies exclude infectious disease coverage. Promoters have to purchase an additional insurance rider to get it. In fact, policies that have been issued after the virus gained attention to exempt COVID-19 coverage. For those that have coverage, payouts will require a force majeure event to trigger coverage. This could be the circumstances under Ultra and Tomorrowland Winter cancellations, with government agencies shutting down the events.
Insurance Experts Expose Their Thoughts
“For coronavirus, the fear that people might contract the coronavirus is not sufficient. The threshold in the policy is the event is ‘necessarily’ canceled, ‘necessarily’ implies that there is a benchmark of severity that leaves you no choice, or prevents you from doing the show”Roger Sandau, Manager at Integro Sports & Entertainment insurance.
“Like just about any cancellation claim, the event has to be either impossible or unsafe to stage”Paul Bassman, CEO of Ascend Insurance Brokerage.
The cancellation of Hong Kong Art Basel, scheduled March 17-21, will cost insurers an estimated $28 million. And that is only the beginning of a massive claim chain that could shake the foundations of insurers.
Tokyo Olympic games are in jeopardy as well, and it could be a significant hit to the event insurance market and the insurers involved in it. While the situation would not put these companies out of business, as they’re public companies, they’ll need extra funds to keep their activity.
“We simply do not know yet the potential global underwriting losses that may occur in all lines of coverage, including the event cancellation market. Large losses, potentially, could affect both premiums and capacity for many lines of coverage,”Ben Stern, managing senior vp at Heffernan Insurance Brokers.
Inside Insurance’s Context
Prior to this coronavirus outbreak, cancellation insurance experienced a constant increase in price. The reason for this appreciation is the widespread losses in the cancellation market as well as the global insurance market overall.
Event cancellation overage is still solid, however we have seen situations where rates have increased so dramatically that it no longer makes sense to put full coverage in place,”Paul Bassman, CEO of Ascend Insurance Brokerage.
In conclusion, the coronavirus and the huge pandemic it’s causing is leading to incalculable losses and affecting the insurance industry. Again, EDM is also experiencing the consequences of this worldwide outbreak. Besides, many industries are experiencing an authentic nightmare with this health issue. In addition, top festival organizers now need to pay extra attention to their ticket refund policy. This notion was once seen as negligible, has developed into something that is difficult and sometimes unpleasant for both parties of the deal.