How to Prepare for Festival Insurance in a hard market
The planning involved to stage a large scale event is immense, costly and time-consuming. This is all with huge financial risk. It is difficult enough delivering a festival in normal times. And these are not normal times. Events industry is of course one of the most hit by the pandemic. With a glimmer of light at the tunnel, many festivals are hoping to go ahead this summer. Whilst our support for government backed pandemic insurance can be read here, what about insurance for the plethora of other risks involved in staging a festival? How can festival organisers get the best value in what is an extremely challenging market?
The extent that your festival or event will be affected by the hard market will vary depending on your risk profile, claims record, planning, risk management and of course how you shop around and what broker you go with and their relationships with underwriters.
What is a hard market?
A soft market is an ideal buyers market, insurers have lots of capacity to play with, there’s big insurer choice and this often leads to lower prices and broader coverage, enhanced competition means the power is with the buyer.
However, and it is no secret, we have now entered into a hard market. The impact of which has a profound effect on businesses across the UK. With decreased insurer capacity, they become more selective on what business they can take on.
The extent that your festival will be affected by the hard market will vary depending on your risk profile, claims record, planning, risk management and of course how you shop around and what broker you go with and their relationships with underwriters.
Why is it a hard market for festival insurance?
Covid 19 has had a disastrous effect on insurance market. Full impact of losses are yet to be realised , but could easily total £4 billion in UK alone. The contingency market was one of the hardest hit in this regard. With 2020 taking victim of many high-profile sports tournaments, as well as music concerts. Whist vast majority of festivals not insured for communicable disease , the losses were still catastrophic. CEO of Lloyd’s John Neal, stated that the pandemic was “no doubt the largest insurance challenge the industry has ever faced”.
But the tide was turning on contingency market long before Covid 19. 2017 saw some very high profile weather losses. Covid 19 merely compounded what was already a difficult market.
What can be done to get the best festival insurance in a hard market?
Work with your broker to provide quality information about your festival. Demonstrate up to date risk management procedures. Poor information will often lead to a no quote or higher premium. With a broker that understands what you do, willing to take the time to learn about your festival and its profile, and can leverage the market in your favour. Detailed management plans, stage installation, Security, mapping. These all work in your favour.
An early start is also key, with a clear strategy in place. A three month lead time is highly advised. Can’t stress how important this is. If you are up against it time wise, insurers will pick up on this and quote accordingly. Likewise, with the benefit of time we have seen 200% price increases drop to 70%. In many cases, insurers are taking a lot longer to respond also, with many risks needed higher management approval before passing back. This takes time. Starting the process early may avoid nasty surprises late on when there’s little time to do anything about it.
Flexibility can also be key. Contingency market in particular is having a shake up with coverage and adding exclusions. Of course, it is well documented that Covid 19 will not be covered, but also many now face severe weather cancellation restrictions.
Flexibility in how you approach your insurance requirements could be key. If you are willing to take on more risk than previously before, let your broker know what areas you have room for manoeuvre on. Work with your broker to break down the ratings and cost for every element of the policy. You may find you are paying a higher rate for something less important to you. Don’t just look at overall premium, ask for breakdowns and get granular with it.
Should I be weary of new markets?
As with every hard market, certain insurers pull capacity completely, others have it reduced, and new contenders come in, and see opportunity. This is the way of insurance and not something immediately to scorn.
Of course, having a long standing relationship with your broker and underwriter can be a valuable asset and one to protect if possible. But if your festival premiums are too high, it is human nature to shop around. So be wary, yes. Make sure you are comfortable with the Wording and Coverage, make sure you have asked sufficient questions that you are comfortable with the experience. Then by all means make a judgment call.
Its no doubt challenging times for all involved. The key to making the most of your insurance is to come prepared, come early, and be demanding from your broker! Be prepared to answer more in depth questions than ever before. Work with your broker to consider and work through all options up front – well ahead of key renewal dates – as there will be more that your broker can do in terms of programme design, policy coverage, structure, and choice of markets – which ultimately will have a bearing on how much premium you will end up paying.
If you are an event or festival promoter and you want to get in touch with our team about your insurance requirements please call 02079234191 or email at firstname.lastname@example.org
For more information on our festival product please see here