Insurance
Event insurance:
time to adjust the
equation?
PAUL COOK ASKS WHETHER IT IS THE BEGINNING OF
THE END OF UNREASONABLE LEGAL CLAUSES
ovid-19 has impacted
people and businesses in
many ways. While there
have been some positives,
such as dolphins appearing in the
Bosphorous and pollution levels
decreasing, for most, the impact has
been adverse.
Event delegates, planners and event
service providers of all types have been
affected. Large or small, local or global,
profitable or charitable, organisations
everywhere have been on a mission to
survive. For an industry that is about
bringing people together, the sector has
suffered more than most.
For many businesses, the first place
they looked when the virus took hold
was to their insurance providers. They
believed that losses from the pandemic
would be covered and they would be
provided with some form of recompense.
But, for many seeking help, there was
none to be found.
Insurance policies have exclusions on
them, things such as fraud and war are
automatically excluded. So too, are
losses due to a communicable disease.
And that is a big problem as Covid-19 is
a communicable disease.
However, the Communicable Disease
Exclusion (CDE) is nothing new. It has
been in place for a number of years. If
you look at other communicable
diseases, such as foot and mouth disease,
avian flu or SARS you would discover
that losses from them, will also not have
been paid.
Is it reasonable, however, for
insurance companies to use their
exclusions at the time of a global
pandemic? Clearly some exclusions such
as fraud will always apply. However, for
communicable diseases is there room for
some adjustment?
In the UK this is being put to the test.
The Financial Conduct Authority (FCA)
is presenting a major legal case against
various insurers, on behalf of hospitality
and event venues which are fighting for
a pay out.
Venues in the UK across the
hospitality and events spectrum have
struggled to receive recompense from
insurance policies, after Covid-19 caused
widespread cancellations and disruption.
The FCA is combining a large number
of these cases into one major group
action lawsuit.
The aim is to combine a broad
spectrum of policies into one
representative case, which will go the
High Court. If this case wins, the
trickle-down effect could potentially see
many more similar, individual policies
pay out for hospitality and event
venues.
The stakes of the
case are high
for
both the hospitality/events sector and
the insurance sector.
There is also pressure in other
countries on their insurance providers
to help alleviate the Covid-19 impact.
In the USA, Thomas Keller, a famous
restauranteur, has taken on the
insurance companies because none of
them were paying out on business
interruption claims. The suit, filed by
attorney John Houghtaling, requests
that the court make a legally-binding
decision on whether Keller’s policy
allows him to recover business losses
sustained in connection to the outbreak.
The lawsuit was filed in California.
On the East Coast, a bill being
drafted in the state of New Jersey could
change things dramatically for certain
property insurers in respect of business
interruption losses due to the Covid-19
outbreak. If approved, the Draft Bill
would take immediate effect and
essentially void any virus exclusions
such policies may have.
In Australia similar arguments with
insurance companies are in play. A
number of businesses could be saved if
insurers paid out because the business
interruption was caused as a result of
government shutdown. However, it’s not
that simple: some policies exclude loss
by pandemic. Also,
24 / CONFERENCE & MEETINGS WORLD / ISSUE 107