How to navigate 2024's dicey special-event insurance demands
Higher premiums and coverage-limit requirements reflect the growing laundry list of today's event risks.
When it comes to protecting special events in 2024, almost any insurance policy can be found — at a price, and often with strings attached.
“The market for insurance is, in a word, dismal,” says Laurie Kirby Founder with FestForums.com.
Policies can be found for nearly every type of event, but that doesn’t mean they will be affordable, especially now that venues and municipalities are upping their insurance requirements.
Where a policy with limits of $1 million per occurrence/$2 million aggregate may have sufficed in years past, according to Kerri McDonald with R.V. Nuccio & Associates Insurance Brokers, venues today are demanding much higher limits — often $5 million per occurrence just to start for events as simple as a wedding.
“It is pricing people out of events, and it is making it so smaller vendors who want to serve those events are no longer able to afford the coverage to participate,” McDonald says.
Kirby added that the higher limits in some ways represent today’s laundry list of risks that event holders are taking on.
“There are so many exposures festivals face; potential injuries to attendees, mass shootings, property damage, event cancellation, cancellation of performers, food-safety issues, host liquor liability, continued adverse weather due to climate change, and even terrorism,” Kirby says.
In addition to today’s higher limits, underwriters are also demanding event holders prepare robust risk management plans beyond what might have been required in past years. This could include stepped up safety rules, plans to provide the attendees with hydration, and even a plan for how to handle illicit — and in some cases — legal drug use.
“Extra hoops for festival organizers when procuring coverage include comprehensive safety and emergency response plans, including crowd control measures, medical provisions, and security protocols,” Kirby says. “Additionally, safety plans, stage and exit plans, health protocols and proof of financial stability may also now be required. It has forced the industry to be more diligent and professional it its planning.”
McDonald says drug-themed events involving everything from pot or microdosing to frog venom and ayahuasca are all emerging and require event staff to get much more preparation and education on how to keep attendees safe.
“Most markets don’t cover drugs served at the event because it is still illegal federally, but that doesn’t mean the event holders don’t need to be prepared for everything,” McDonald says.
McDonald adds that many event holders are trying to get sneaky these days by hiding the riskiness of their event by creatively renaming it to something much more innocuous.
“A lot of people will rename events. For instance, they will say something is a ‘religious retreat’ which, you would expect to be something where a group goes and practices religion. But it turns out it is a summer camp for kids, which is a whole different risk structure,” McDonald says.
McDonald says so-called “yoga retreats” often end up being big festivals with tens of thousands of people, DJs, and a ton of drug use.
“Oftentimes, we have to go to social media and search engines to get to the truth of the matter,” McDonald says. “It’s about the entire risk of the event not just the name of it.”
McDonald says it is now essential to demand details to get a true sense of what the policy will be covering.
“If a client tells us there is not flyer or invite, we know that people have to be notified some way or another so we are going to get to the bottom of it,” McDonald says.
McDonald says increasingly more and more event policies are being written on the surplus market. She says that while there are enrolled policies to be found, the surplus market makes it easier to customize risks in ways that enrolled policies may be limited by state regulations.
Regardless of whether the policy is enrolled or on the surplus market, McDonald says it is essential to ensure the contract is being written by a reputable firm.
Because of the increased risks and the increased limits — and the corresponding increased costs — many festivals and events are either choosing to self insure or chasing the lowest possible price. But that can be a risk they don’t quite understand.
“The public is too price driven and does not believe something can happen at an event,” McDonald says. “They often look for the cheapest price not the best coverage, which is a huge disfavor to the client.”
And the self-insurance route is often not even a possibility due to venue requirements.
“This may render performance impossible as municipalities, stakeholders and venues may not concur. While self-insuring can be a viable option for some, it is generally not feasible,” Kirby says.
Michael Giusti, senior writer and analyst for InsuranceQuotes.com.