Following the recent news that Wimbledon, a prestige UK tennis tournament, is set to receive over £100m from its pandemic insurance, Ben Carey-Evans, Insurance Analyst at GlobalData, shares his insights on the events preparations for pandemics such as the coronavirus (COVID-19) outbreak:
“Wimbledon has shown it is one step ahead of most businesses by having insurance in place for current events. It has been paying around £1.5m per year in pandemic insurance since it took notice of the SARS outbreak in 2003. It has paid out roughly £25.5m over the 17-year period, and it is set to recover around £114m, making it a very sensible investment.
“Reputable sporting events, such as the Premier League and The Open (golf), have been cancelled or postponed, causing the organisers to lose a lot of their investment. This unprecedented disruption to events caused by COVID-19, and the significant pay-out to Wimbledon will surely see all event organizers around the world look to invest in this product in the future.
WILL INSURERS QUOTE ON PANDEMIC COVER FOR SPORT, MUSIC AND CONFERENCE EVENTS IN 2021?
Until now, exclusion has been the norm. But it’s hard to see how the Olympics, World Cup, Glastonbury, Six Nations, F1, or even a Justin Bieber tour, can be staged without all-risks cancellation cover.
A spokesperson for Hiscox told the Daily Telegraph that `fewer than 10 percent of customers in the events sector had pandemic cover.’ Meanwhile in the USA Proper21 bar group is suing Seneca for failing to pay out on the bar/restaurant’s Business Interruption insurance. Seneca has denied the claim and already pointed out that Proper21 did NOT have `closure due to pandemic’ coverage; that risk was specifically listed under exclusions.
Was there pandemic cover available for business before Coronavirus? Yes is the answer.
John Neal from Lloyd’s of London told City AM recenmtly;
“Post-ebola in 2014 Munich Re and Marsh introduced a pandemic product called Pathogen RX – and no one bought it. Even post-ebola no one saw pandemic as a risk they would directly insure against,”
Eveything has changed now of course. GlobalData notes that this massively damaging cessation of normal business life for months could see pandemic insurance move from being a niche product to an essential one for sports, business events and music organizers. Insurers will face challenges in pricing premiums due to a sharp rise in popularity and the significant level of risk attached to the product.
“Data from GlobalData’s SportCal team, shows that Wimbledon earns around $160m in media rights, $151m in sponsorship and around $52m in ticket sales annually. It will save $38.7m on prize money, and more on staff wages, but this still represents a significant loss of income, despite the sizeable insurance pay-out. Insurance represents damage limitation for the competition, and it will find itself in a much stronger position than most other events in the world during this period.”