Published on: 17 February 2021 by Michael Lamb
As we start to look towards a future post-Covid, and envision normality returning, many people are eagerly awaiting the reintroduction of events and activities that were cancelled or postponed due to the virus.
From music concerts to sporting events, much of life was put on hold for 2020 – both in Hong Kong and throughout the world. With the cancellation of the Hong Kong Rugby 7’s, the Wine and Dine Festival, and myriad other activities that mark the city’s social calendar, the return of these annual highlights cannot come soon enough.
However, as it has been some time since large scale and noteworthy events have been held in Hong Kong, now may be as good a time as any to refresh you as to the options for event and contingency insurance.
As we have learned from the global Covid-19 pandemic unexpected situations can and will arise, and those situations have the potential to impact plans and disrupt events.
COVID-19 is a recent international example of a situation beyond our control leading to disrupted plans, but a situation leading to a cancelled or postponed event could be as simple and ordinary as a burst pipe causing flooding at the venue. In fact, when it comes to event insurance, underwriters realize that the purpose of insurance is to protect the policyholder against as wide a range of risks as possible.
This is why event insurance ensures that the event organizers are covered against the loss of:
While there are exclusions to this cover (which we’ll get to below), the fact that event insurance starts with such a broad scope of coverage offers policyholders and event organizers a great amount of security.
To anyone who is a frequent reader of this website it should come as no surprise that all insurance has Exclusions attached to the coverage, and that this is true with event and contingency insurance policies.
Exclusions that normally apply toward the cancellation coverage offered under a Hong Kong contingency insurance plan include:
While the exclusions placed on many types of insurance are in all cases rigid and immovable, this is not the case when it comes to event insurance and contingency insurance products.
For example, while Non-appearance is generally excluded from coverage under an event insurance policy, it is possible to have that exclusion “carved back” and removed from the policy for an additional fee and with additional underwriting of the event.
This type of modification is generally used for events which depend on the attendance 1 or more specified persons.
A Comedy show would not be able to go on without a comedian, so specifying that the event will be cancelled without the comedian appearing, and including coverage for non-appearance under the contingency insurance plan by carving back the exclusion ensures that appropriate coverage is obtained against a core risk.
Among the cancellation exclusions included in contingency insurance is Communicable diseases and related threats resulting in travel restrictions.
As we have stated, it is often possible to carve back exclusions on contingency insurance plans; making the exclusion covered. However, in some cases this is not compatible with the fundamental concepts of insurance as is currently the situation with the covid-19 virus.
Insurance is defined as the equitable exchange of risk for a predetermined fee.
At present, Covid-19 is not a risk – it is a global certainty. This means that there is no way to equitably exchange the risk of your event being cancelled due to the Covid virus; in the current environment any event is almost guaranteed to be cancelled due to Covid. Unfortunately, a blanket exclusion specifically for Covid-19 and related mutations is likely to be placed on contingency and event insurance plans well into the future.
This means that, even if you have insurance, it is unlikely that your event policy would cover the costs related to a cancellation caused by the Covid-19 coronavirus.
However, it does not mean that all disease are going to present the same risks – and diseases which are currently impacting organizer’s ability to hold events are probably not going to have that effect indefinitely.
While it is unlikely that a policyholder is going to be able to carve back the communicable disease exclusion on a plan in the midst of the Covid-19 pandemic, opting to include such coverage on a future plan, after the pandemic’s impact has softened and insurers are able to see equity in the exchange of risk, is the best way to protect your future events against a changing world.
Although the insurer has the ability and discretion to decide which exclusions, they are willing to accept carve backs on, it is important that you (as a policyholder) attempt to cover the risks which matter to you. Prior to the Covid-19 Coronavirus outbreak there were very few requests for event insurance plans which included coverage against communicable diseases – even with the history Hong Kong has with SARs and Bird Flu.
While obtaining such coverage now is not possible, it does not prevent organizers from fully exploring their options.
Event insurance plans give you the choice to include the coverage you need, with options of:
With the disruption we’ve seen over the last year to events worldwide it is important that you properly understand and protect your investment as we start to look to the future and recommence organizing.
12 months ago the idea that a global health crisis would disrupt something like the Hong Kong Rugby 7’s or the Tokyo Olympics would have been inconceivable. Who knows what the next issue could be? The good news is that with a comprehensive event and contingency insurance policy you will at least have the security you need knowing that you won’t experience a total loss when it happens.
For more information, or to receive a free Event Insurance Quote, please complete the short form at the top of this page or Contact Us to arrange a no-risk, no-obligation consultation with one of our expert advisors.