Israel-Gaza conflict triggers further event cancellation coverage restrictions

Following the attack on Israel by Hamas on 7 October and the subsequent war in Gaza, insurers are reviewing cancellation coverage for events in the Middle East and adding exclusions dependant on risk, according to Commercial Risk’s broking sources. Several sporting and entertainment events in Israel and the Middle East have been cancelled or postponed since the war started. Further afield, the MTV Europe Music Awards in Paris were cancelled, with organisers citing “the volatility of world events”, while dozens of events in the US and Europe have been cancelled due to cultural sensitivities. While it is believed the contingency and event cancellation market has not yet suffered large losses from the conflict in Gaza, insurers say they want to be clear about the intention of the cover and how it will respond, broking sources said. As a result of the conflict, some neighbouring countries have cancelled events in solidarity, although they were not affected by the war itself. Now many insurers are beginning to add exclusions to event cancellation policies that deny losses arising from the conflict in Israel and Gaza. Where applied, these wordings may exclude losses arising ‘directly’ or ‘indirectly’. They should be clear on which regions they apply to avoid a risk of unintentionally limiting cover, including for events that may take place beyond the current worldwide conflicts, according to Edel Ryan, a senior executive at Marsh. Such exclusions would, for example, apply to losses where a local authority cancelled entertainment events in solidarity with the ongoing devastating conflict, or where an artist refused to perform in a certain territory or took a stance on a conflict that led to a cancellation, she explained. The market applied similar exclusions at the start of the Russia-Ukraine war. As a result, almost all terrorism exclusion buybacks from the contingency market will now exclude both Russia-Ukraine and Israel-Gaza conflicts, broking sources said. With each new major conflict, the event cancellation market is likely to introduce other similar exclusions going forward, although not always permanently and case by case. According to Ryan, it is essential for the broker’s conversations with clients to be clear around specific exclusions and what is both covered and not covered. “If you look at this from the clients’ perspective, you can get to the point where you ask ‘What does it cover?’. However, there remain huge benefits to having the contingency cover in place for a wide range of risks beyond the control of the organiser in addition to the contractual obligations where applicable,” Ryan told Commercial Risk. “We have occasionally seen event organisers select to self-insure, possibly because of price and exclusions alongside increasing budget constraints. However, Covid-19 is still so fresh in the memory of many that both did and did not have the cover, and that memory is still very raw. Self-insuring comes with financial risks,” she said. With terrorism and war coverage becoming more restrictive in the contingency market, brokers are increasingly turning to the specialist political violence market to plug gaps in cover. “Increasingly we look more towards this type of cover being more bespoke and specific to the political violence markets environment, who may have more appetite in writing these sorts of cover than the traditional contingency markets,” according to Ryan. “We are looking more and more towards the political violence market for event cancellation terrorism and war, and looking less at the contingency markets. But we haven’t had to do that yet on liability. On personal accident, only specific markets have appetite for writing these territories, but there are specialist markets that will write personal accident in those high-risk territories,” she said. Even beyond conflicts like Israel-Gaza, the event cancellation market is taking a more cautious approach to political risks more generally, according to Ryan. It has become difficult for some events to purchase the buyback option for civil commotion in the traditional events cancellation and contingency market for certain territories, she explained. “If you have a live music tour schedule that moves around different territories, for example, we are finding that the contingency market is becoming less of an ideal home for political violence and terrorism risks. When you look to buyback the exclusion under a cancellation policy, while it might be the most competitive and compelling from a premium point of view, those insurers might have a lack of appetite for certain territories, so you might find you are unable to secure buyback for all the tour dates,” she said. “Not only is the political violence market a positive solution for terrorism risk, which most event organisers do look to buy, we are increasingly finding that we are putting civil commotion into those markets as well,” she added. Differing risk appetites and coverage terms can make event cancellation insurance more complicated, and in some cases, Marsh is seeing premium increases as a result of capacity challenges, especially for large events that require the support of multiple insurers, according to Ryan. “We may have to look to markets that have appetite for some territories but not others, while some markets will want to add specific exclusions, and others might not, and that can make the event cancellation placement that much more complicated. In addition, individual insurers may have caps on the limits they will deploy per event. However, the contingency market is also willing to compromise and work with our clients to get to the right result,” she said. “At the same time, you need to look at separate political violence cover, which can be more expensive than traditional buyback [from the contingency market] however, with much broader cover for the clients,” Ryan said.

Israel-Gaza conflict triggers further event cancellation coverage restrictions

New exclusions apply to events beyond the direct conflict zone

Want to read this article?

Read Next

Vast majority of global wind and solar energy assets unprotected from fire

Ardonagh to acquire PSC Insurance in Australia

Baltimore bridge supply chain insurance losses likely

Munich Re Q1 net result up 68%, buoyed by ERGO international growth and April renewals

New cyber insurance endorsement from AXA XL in US

Vast majority of global wind and solar energy assets unprotected from fire

Ardonagh to acquire PSC Insurance in Australia

Baltimore bridge supply chain insurance losses likely

Munich Re Q1 net result up 68%, buoyed by ERGO international growth and April renewals

New cyber insurance endorsement from AXA XL in US

Want to read this article?

Read Next

Vast majority of global wind and solar energy assets unprotected from fire

Ardonagh to acquire PSC Insurance in Australia

Baltimore bridge supply chain insurance losses likely

Munich Re Q1 net result up 68%, buoyed by ERGO international growth and April renewals

New cyber insurance endorsement from AXA XL in US

Related Articles