Event sponsors keeping eye on fireworks risks

As July Fourth approaches and a barrage of public firework displays light up the night sky, insurers and event sponsors are paying closer attention to the risks involved.

While state requirements for insuring public fireworks display permit holders vary, a 2003 fire at a Rhode Island nightclub that killed 100 people has brought more attention to pyrotechnic safety.

For example, according to information posted online by the American Pyrotechnics Assn., Texas' fire marshal requires proof of general liability coverage of at least $500,000, while Florida requires a $500 minimum, and Illinois regulations do not stipulate a minimum.

Along with a sponsor's general liability coverage, the pyrotechnic company must provide its own liability insurance.

Boynton Beach, Fla., for example, requires pyrotechnic companies to provide proof of insurance before staging shows, said Chuck Magazine, risk manager for the city. The contracts take into account the company's cost of insurance, he said.

This coverage, depending on the contract, can be far reaching. For example, if a Boynton Beach show is to take place over water, the operator's policy will name not only Boynton Beach but also the adjacent city, to ensure that all potential areas are covered.

The cost of insurance for these events is a reflection of the current state of the economy, said Eric Treend, associate senior vp of the pyrotechnics group at Britton-Gallagher & Associates Inc., an insurance brokerage firm in Cleveland. Rates, he said, are high, but coverage is not as expensive or difficult to obtain as in the 1980s.

Mr. Treend also explained that the fire at the Station nightclub in West Warwick, R.I., in 2003 during a concert by the rock band Great White was a high-profile event that brought more attention to pyrotechnic insurance (BI, March 17, 2003). The higher rates for this coverage are making it harder for smaller operators to find affordable insurance, he said. Major public firework displays in large cities usually have coverage limits in the range of $1 million to $5 million.

Furthermore, LeConte Moore, head of the entertainment and media division at Marsh Inc. in New York, suggested that the Rhode Island fire changed the way organizers handle insurance, with a heightened awareness of indemnity agreements and exclusionary language in insurance policies. Mr. Moore said legal counsel has become more involved with these contractual issues and is paying more attention to the details.

Because of the nature of public displays, managing risk is a key issue in planning such events, observers note.

American Pyrotechnic Assn. Executive Director Julie Heckman cited the relationship among sponsors, pyrotechnic operators and public safety officials as an essential triad in ensuring public safety during firework displays. "These parties need to be actively involved in every step of the process," Ms. Heckman said. All three can work together to coordinate crowd control, monitor display areas and keep the public out of an area after a show.

Mr. Magazine, too, stressed the importance of working with pyrotechnic operators to ensure safety at public firework events. He gave an example of a show several years ago that he was forced to postpone when the crowd encroached on the display area. Public safety officials then had to move about 100 spectators back 10 to 15 yards.

Chris Rogers, director of risk control for Chicago-based Aon Corp.'s entertainment practices group, said that sponsors should look for operators with experience and a "good track record." He also recommended a "good documented predoor-opening risk survey" before events. Other precautions, such as informing the crowd of the location of exits and instructing them how to react in case of an emergency, are also important, along with making sure event staff have proper emergency training.

Currently, there is no national licensing program for pyrotechnicians. Requirements vary from state to state, but the industry generally follows the National Fire Protection Assn. Standard Code for Outdoor Fireworks Display 1123, which outlines procedures and safety requirements for the handling of fireworks for public displays.

Guy Colonna, NFPA assistant vp and staff liaison to the Committee on Pyrotechnics, said that public-display accidents and other incidents often stem from technicians who are not licensed or who did not follow Code 1123 requirements. As part of the code, there has to be a site plan mapping out where the fireworks will be delivered and kept, where the show will be staged, where fireworks will be loaded, the fallout zone, access routes and even where the spectators can park.

"There can be a disconnect between what constitutes a really pretty show" and the site the sponsor may have available, he said. It is up to the operator to determine what is suitable and safe.