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Underwriters have increased their scrutiny of event risks as a result of high-profile stage collapses last year, but pricing and capacity remain competitive.
In addition, while municipalities are reviewing safety regulations and standards for temporary structures, any changes may take years to materialize, industry experts say.
Stage collapse incidents include one that happened during an Aug. 13, 2011, performance by Sugarland at the Indiana State Fair in Indianapolis, which resulted in seven deaths and left more than 40 people injured. Another in Hasselt, Belgium, during a Smith Westerns performance at the Pukkelpop Festival, killed five and injured up to 140 people later that month.
Other incidents include a video screen toppling during an August Flaming Lips concert in Tulsa, Okla., and a stage roof coming down during a Cheap Trick show in Ottawa.
To make informed underwriting decisions for event liability risks, insurers are asking buyers questions that include structural integrity of all temporary structures, what kind of emergency preparedness and evacuation plans are in place, and ingress and egress controls, experts say.
Buyers of event insurance need to reconsider liability limits and be prepared to provide underwriters with risk management plans and procedures for crowd control issues, weather-related exposures, emergency preparedness plans and more, experts say (see box, page 20).
“We're concerned with being able to put on a concert or an air show...but at the same time protecting the 431,000 citizens that we have in the city and putting on a quality show,” said John Grook, risk management administrator for the City of Virginia Beach, Va.
Virginia Beach holds a variety of events, including festivals and concerts, air and water shows, fireworks on the beach, surfing competitions and sports racing events with 20,000 participants and nearly 100,000 people coming into the city, Mr. Grook said.
Because of Virginia Beach's size, Mr. Grook said he often works with large promoters and vendors who are required to purchase liability insurance coverage for events. “We actually found coverage that wasn't too difficult to find,” he said.
Risk management controls also are essential for major events such as the Olympics (see related story).
Having such risk plans in place helps underwriters make informed decisions.
Since the recent spate of stage collapses, as event organizers buy event liability insurance, “absolutely there will be tightening of underwriting,” said Peter Williams, president of Los Angeles-based specialty insurer OneBeacon Entertainment, a unit of OneBeacon Insurance Group Ltd. that provides coverages for the entertainment, sports and leisure industries.
“Now people are actually listening to our risk control recommendations. And certainly now for anybody putting on an outdoor event, it will be about the experience of the promoters, it will be about them listening and partaking actively in a risk management program, and certainly having a very effective wind plan,” Mr. Williams said.
James Chippendale, executive vp at entertainment insurance broker Doodson Insurance Brokerage L.L.C. in Austin, Texas, said that while promoters and organizers who typically purchase $1 million in general liability limits are not seeing rate changes for events coverage, they are reconsidering their coverage limits.
“We are pushing our clients to take a look at this again to consider much higher liability limits based on the sheer fact that one catastrophe can eat up that $1 million limit within seconds,” he said.
As stages and other structures at events can be massive in size and risk, municipal authorities also will be taking a closer look at safety requirements, said Bill DesPres, Atlanta-based risk engineer with Zurich Services Corp.
“I do see places looking closer at these types of structures and developing more robust requirements for inspection and construction,” he said, noting also that building code changes takes time.
However, stages such as the one that collapsed at the Indiana State Fair are not considered structures, and there are no requirements to inspect them, Mr. DesPres said.
“To change that, it has to be done—and it varies from state to state—at the legislative level,” he said.
For example, when new codes are introduced for approval by municipalities, the adoption time causes 2010 codes to be implemented in 2012 or 2013, Mr. DesPres said. “Codes and standards generally lag what's actually adopted by the authorities having jurisdiction,” he said.
In the wake of the recent stage collapses, concerns about social media have added a new spectrum to event liability risks, said Lori Shaw, director of sports and leisure in the entertainment practice group at Aon Risk Solutions in Charlotte, N.C.
With the upcoming U.S. elections this year, many political events will take place with an extra emphasis on crowd control and violence risks.
“The underwriters are all sitting there seeing on (television) the same things we are with what's happening in Oakland with Occupy,” Ms. Shaw said, referring to the ongoing series of demonstrations by the Occupy movement in Oakland, Calif., that often have erupted in violence.
In preparation for the G8 and NATO summits in Chicago in May, city officials and law enforcement agencies have begun to brief property, retail and business owners about increased and comprehensive security measures to address potential violent demonstrations. Many property managers, schools, and businesses are drawing up emergency and crisis plans to deal with any violence, property damage and safety, according Crain's Chicago Business, a sister publication of Business Insurance.
In this context, social media outlets are a platform that enables a large mass of people to communicate and organize. Twitter, Facebook or other specific websites are used “to try to gain awareness and encourage people to show up at different sites in order to have a large enough group to get some media attention,” she said.
Rate increases for event liability insurance are not on the horizon yet as an excess capacity has made pricing lower, OneBeacon's Mr. Williams said. But, as more insurers are unwilling to participate in the risk or extend high limits exit the field, competition will decrease and prices may firm, he said.