Why, What, When to Insure

There are three questions that every event organiser should be asking at the planning stage and included as an integral part of their risk management process:

  • Why insure?
  • What to insure for?
  • When to insure?

People are doubtless tired of hearing it said “expect the unexpected” or “prepare for unforeseen circumstances”.  It often takes a serious incident to alert people to the wisdom of arranging the right type of insurance protection before disaster strikes. For an event to be cancelled or interrupted for reasons beyond their control is depressing enough, but worse still if one is unable to obtain any financial compensation for the loss.

We have only to remind ourselves of the previous volcanic eruptions in Iceland and the past outbreaks of Foot and Mouth, SARS, Avian Flu, Swine Flu, Ebola, various terrorist incidents and of course Adverse Weather. Most of these incidents are often perceived to be unexpected prior to their occurrence, but all have been the subject of claims that have been settled for companies that took the trouble to investigate and ensure that adequate insurance protection was in place.

Conversely, after a disaster occurs, there will inevitably be those who request cover for what is a pre-existing circumstance – it is not possible to insure a building which is on fire. The message here is that it is difficult to insure too early against cancellation risks and cover should ideally be operative as soon as contracts with the venue(s) have been signed. It does not cost any more to do so and the protection is potentially wider if in place before an incident becomes a pre-existing circumstance.

The cost of event insurance is naturally a consideration in any budget plan and to achieve the most cost effective result, it is important to be able to demonstrate that there is a good code of practice in place regarding Health and Safety and general Risk Management.  Underwriters usually welcome evidence of good Risk Management and in return are happy to agree generous premium discounts. It is fair to say that in the UK, we are generally more risk aware than many other countries, but it is often not recognised that apart from the main aim of reducing risk which can contribute to saving lives, insurance premiums can be discounted for the reasons already stated. In certain territories, clients can be charged up to 50% premium loading due to inadequate Risk Management. Another benefit of insuring early is that if the cost is factored into the budget process, it does not have to be a bottom line expense.