Prevention has become the focus of underwriters and policyholders in the entertainment sector in response to the Oct. 1, 2017, mass shooting during a Las Vegas country music festival.

Neither that incident, in which 59 people died and about 500 were injured, nor the May 2017 bombing in Manchester, England, in which 23 people were killed and 116 injured by a suicide bomber, has had a dramatic impact on the insurance market’s rates or capacity, experts say.
Attention has been focused instead on how to avoid another such tragedy, although many also point out the sheer unpredictability of such an event.

In addition to a broad suite of property, liability and business interruption coverage available in the entertainment sector that would include coverage for violent acts, firms can also obtain stand-alone active assailant programs, experts say. Policyholders can include promoters, venue owners, third-party vendors and security firms.

The scale of insured entertainment events can range from high school sporting events and community- and charity-sponsored 5K races to rock concerts and the Super Bowl, with a commensurate availability of resources to address any risk.

Planning should cover the period before, during and after an event, experts say.

But “there’s only so much” that can be done to prevent these events from happening, said Kevin Topper, niche president for media and leisure with Morristown, New Jersey-based ProSight Specialty Insurance, a unit of ProSight Global Inc.

Steven A. Adelman, vice president of the Scottsdale, Arizona-based Event Safety Alliance, an association of liveevent professionals, said incidents such as the Las Vegas shooting and Manchester bombing are “extremely rare. In many cases they don’t actually yield many teachable moments.”

But the effort should be made to learn from past events nevertheless, experts say.
“From both an underwriting and entertainment perspective,” there has to be understanding that “these types of catastrophic events are going to happen in our world … and it’s a matter of trying to assess that risk and deal with that risk as best as possible,” said Cari Hernandez, Los Angeles-based senior vice president for entertainment and hospitality at JLT Specialty USA, a unit of Jardine Lloyd Thompson Group P.L.C.

Brian Kingman, Los Angeles-based managing director for Arthur J. Gallagher & Co.’s entertainment practice group globally, said there are lone shooters or active assailants, there are acts of terrorism, “and there’s kind of gray areas between the two,” but “it doesn’t really matter what motivates them necessarily. What matters is how you control the risk.”

Everyone involved, including underwriters, risk control experts, promoters, safety professionals and brokers, “are all paying attention. They’re all always trying to learn about how to control risk,” he said. “Everybody’s learning, unfortunately, from every tragedy.”

Kevin Dougher, vice president of brokerage Johnson, Kendall & Johnson Inc. in Philadelphia, whose clients include the Philadelphia Eagles and the Prudential Center arena in Newark, New Jersey, said while underwriters have asked questions “a little bit differently, where I’ve seen most of the change is with the insureds themselves,” who are “trying to take an active role in changing security protocols to prevent these things from occurring.”

The insureds’ own loss prevention techniques “are much more intensive,” Mr. Dougher said.
In entering the VIP parking lot when the Philadelphia Eagles have a game, for instance, it is no longer a matter of just showing a ticket to the attendant — the undersides of attendees’ cars are also checked, he said.

Policyholders “don’t want to be front page news. They’re doing everything in their power to mitigate and remove that risk before it ever happens,” Mr. Dougher said.

Christian Ryan, Dallas-based U.S. hospitality, sports and entertainment practice leader for Marsh L.L.C., said policyholders “have either maintained the same amount of insurance, or bought more because of what happened in 2017. When you look at it, it was a pretty bad year for big events” such as Las Vegas and Manchester.”

But costs also have risen, he said.

“Generally speaking, it costs more for the higher liability limits,” which “may have been trading at a very low number,” he said. “The cost per million has gone up with clients that have exposure.” Ben Tucker, New York-based head of U.S. terrorism and political violence underwriting for XL Group Ltd., which does business as XL Catlin, said: “We’ve been more cautious about aggregations” from contingent losses in certain cities.

These are cases where, for instance, an incident is in close proximity to an insured location and the police or military authority imposes a restriction on entering the area around where it occurred, Mr. Tucker said.

“Generally, the marketplace is becoming more cautious around those types of coverage retentions” because of some of the losses around the world, he said.

However, “If you have a well-informed operation,” rates potentially will be flat, said Ms. Hernandez, although there could be substantial increases “if you don’t necessarily have all the protocols in place.” While limits vary, “you can get up to a half million,” she said.
The focus now is on security, say experts.

Brian Cuden, market president of Brown & Brown Insurance of Nevada Inc. in Las Vegas, said, “There’s been very little movement” in coverage in response to the Las Vegas shooting.
But underwriters will want to know what elements of security are in place. He pointed to the 1980 MGM Grand fire that killed 85 people, which, he said, continues to resonate in underwriting.

In the shooting case, “It wouldn’t be unfeasible to assume this type of scenario is going to resonate” in underwriting as well, he said.

Christian Phillips, Philadelphia-based contingency focus group leader for Beazley P.L.C., said: “There’s a lot more questions that get asked in the underwriting process post an event like this,” including the security behind it, and “then really it’s just a matter” of whether or not to charge more, although “it’s almost impossible to know where the next thing is.”

Good additional security, though, can “potentially mitigate any potential rate increase, because, obviously,” events are being screened “much more vigorously than previously,” he said.
Some underwriters may increase rates, but “I have made more underwriting decisions depending on the information you get around the security side of it,” Mr. Phillips said.

While rate increases depend upon the circumstances, “We’re more focused on acceptability standards and what an insured is doing” or plans to do “to assure the safety of guests and patrons,” said David H. Harris, senior vice president with Carmel, Indiana-based Specialty Insurance Group, an affiliate of Everest Re Group Ltd.

Paul Marshall, managing director at managing general underwriter McGowan Program Administrators in Fairview Park, Ohio, warned against policy exclusions, including those for post-traumatic stress disorder. “The buyers really have to be careful they’re getting everything they should be,” he said.

Meanwhile, lawsuits have reportedly been filed on behalf of many of the Las Vegas victims and their families.

“The question is whether the promoters met their standard burden of care” when it comes to safety, security, risk prevention and control, “and that’s really the triable issue,” Mr. Kingman said.

“Any time you have a mass casualty situation like that, there are going to be questions about the alleged negligence from a number of different parties,” including possibly those who provided the premises, the security and the concert promoters, Mr. Harris said.

Source: Business Insurance 2018-07-02