Terry Waller:Volcanic ash and what next? The cost of being uninsured
The event insurance specialist discusses the ramifications of the ash cloud and the importance of early cover.
Foot and Mouth, 9/11 Terrorism, Petrol Crises, Swine Flu, Avian Flu, and now Volcanic Eruptions in Iceland have all impacted upon the events industry.
The insurance market is currently dealing with claims resulting from air flight restrictions due to volcanic ash. As frustrating as this will be to any event organiser or meeting planner, whose speakers, artists, delegates or exhibitors have been prevented from reaching their destination, it is surely a comfort to those companies that can at least obtain compensation from having effected the right type of insurance protection.
Under a cancellation policy, it is not possible to ‘insure a building when it is burning’, or any other pre-existing circumstance. The recent spate of claims in respect of problems caused by the volcanic ash will be for organisers who had the foresight to insure as soon as their exposure commenced and prior to the eruption occurring. As is often the case when disaster strikes, cover is requested ‘after the horse has bolted’, when it is too late.
It is sometimes assumed, incorrectly, that cover is only available if there is a total cancellation. Very often claims are paid for costs necessarily incurred, so that an event can be kept alive and proceed. This is an integral part of the cover, which is often not understood, but is highlighted by the recent Icelandic ash situation, when it has been necessary for underwriters to pay additional travel costs for artists or speakers to be rerouted to their destination via an alternative mode of transport.
The main message here is that cancellation cover should be put in place as soon the venue contract is signed and the client’s exposure begins. Taking action to insure early does not cost any more, but it could prove expensive not to.
As event insurance specialists, we are often seen as the exploiters of bad news, but we would in my view be justifiably criticised if we did not emphasise the importance of insuring early, all for the right reasons. There are many unforeseen risks, most of which can be insured providing that a pre-existing circumstance has not arisen.
Finally, it should also be borne in mind that sometimes underwriters will agree to ‘write back’ a circumstance which is deemed to be pre-existing. The Icelandic volcano incident is a good example, whereby quotes can be obtained to include this risk, but subject to payment of an additional premium.
Terry Waller is the managing director of Arc International