Event insurance - what you need to know

Planners know that event organisation and unpredictability go hand-in-hand. Safeguarding against risk is therefore not only sensible, but the only way of protecting oneself and one’s business against worst-case scenarios. Liesl Venter finds out what planners overlook when it comes to the much-needed, albeit sometimes grudge, purchase – insurance.

Organisers all have one goal – a flawlessly executed incident-free event. Whether it’s a small, intimate cocktail party for ten or a mega-conference for thousands, some things are simply not in a planner’s control.

Things go wrong, and incidents can happen.

“Insurance mitigates risk,” says Tiaan Erasmus, regional manager of iTOO Special Risks. “Not planning scrupulously for risk can be an expensive, even ruinous mistake.”

Insurance, however, is often not a priority and therefore left till the last minute. “It is not uncommon to find insurance being discussed and taken only a day or two before an event. It is in these hasty envrionments that poor decisions are made about the insurance cover necessary for the event,” Erasmus says.

Denise Hattingh, owner and key individual at KEU Underwriting Managers, agrees. “Unfortunately insurance is often the very last thing planners think about. The information we receive is incredibly poor and everything has to be done in an absolute rush, yet insurance is a risk management tool that is not only a legal requirement, but a very important element of any event being hosted – no matter the size or location.”

Understanding the landscape

One of the major concerns, says Hattingh, is that planners don’t always understand the insurance landscape. “Many organisers have no real understanding of the various risks themselves or how best to mitigate that risk with insurance. At best, they are purchasing a piece of paper that holds no real value or benefit to them until such time as a claim has to be settled,” she says.

However, says Hattingh, it is important that the ‘piece of paper’ contains all the necessary clauses, requirements and covers. “You have to understand what you have purchased and, just as importantly, why you need it and what you can do with it should something go wrong.”

By law, underwriters of event cover are not allowed to engage directly with planners. “We spend a lot of time and effort working with brokers who in turn directly engage with planners,” Hattingh says.

Erasmus says it is therefore essential that planners choose a reputable and excellent insurance broker. “A good broker will find the best product for your specific needs, making sure you have the right cover for your event in place.”

The provisions of the Consumer Protection Act (No. 68 of 2008) and the Safety at Sports & Recreational Events Act (No. 2 of 2010) carry hefty penalties for negligence at an event – ranging from fines to imprisonment, says Erasmus. “If one takes a step back, it then becomes clear why a corporate should be employing a Corporate Events Organiser instead of just having someone in a company organise a function or conference. Organisers carry a huge burden as they are ultimately at the top of the responsibility chain.”

One size does not fit all

Different events have different risks, the experts agree.

Says Erasmus: “Every event needs to be evaluated on its own merit. It is important to get the right policy for the right event with the correct limits. That is why a risk assessment for each and every event is necessary as no two will ever be exactly the same. Each event has to be protected against its own set of liabilities.”

Often, organisers see insurance simply as a box that has to be ticked and tend to take a policy without looking at the fine print or what is excluded, Erasmus says.

“Respondents have up to three years to lodge a claim following an incident, yet some liability cover only extends for 30 days after the event,” explains Erasmus. “A claim brought years later would not be covered and the organiser faces very real risk of a personal liability claim against them, financial and reputational loss.”

Erasmus says a good risk management programme is essential for any organiser. “It is a question of identifying all the risks facing all the parties involved – that goes for service providers and sub-contractors as well.”

According to Hattingh, contracts have to be a bigger priority for planners, who often don’t spend enough time on them. “Who are you appointing, what is their share of the responsibility and do they have the necessary cover in place, are things that are glossed over. Planning effectively for the risk means knowing every last detail and having the right cover in place.”

All contractors should have their own insurance, Hattingh adds. “By default, the organiser will be first in line when it comes to who is responsible when something goes wrong. Too often in the events industry, a lot of assumptions are made and this can be very costly when incidents do happen.”

Ensuring that all contractors are insured and, if not, are taking out extended cover, is not always a priority. “The challenge is to anticipate everything, and that requires the same level of attention to detail as planning the event itself,” says Erasmus.

“We follow the plan, execute, insure mantra. This is a sure way of making sure there is adequate cover for any inevitable incident,” Erasmus says.

Cover it all

The implementation of the Safety at Sports and Recreational Events Act 2 of 2010 has changed the regulatory environment for event planners, conference organisers and business owners, says Hattingh.

“The Act not only protects participants, spectators and their belongings, but also ensures that the planning, management and enforcement of safety is handled by competent people. More importantly, the Act keeps role players accountable,” she says.

This means that event organisers, sponsors and venue owners are all deemed responsible for an event and are legally required to have event liability cover.

But, liability cover does not mean a planner has mitigated all risk. “You can still face major financial consequences if an event is cancelled,” says Hattingh, who advises all planners to also look at cancellation policies.

“It seems impossible when one is planning an event that it just won’t happen, but there are a wide variety of factors that can impact and lead to an event being cancelled – from a riot in front of the entrance to all the speakers not arriving,” Hattingh says, adding that cancellation in itself comes with massive cost. “Organisers must not underestimate the impact of a cancelled event not to mention the reputational damage.”

According to Hattingh, the third cover that should be considered is exhibition all risk. This relates directly to the infrastructure and equipment used at an event.

“It is in the finer details that more often than not the crisis happens. For instance, what if the sound equipment is installed the day before the event starts, then the next morning when everyone arrives it has been stolen. Who is responsible and who pays for it to be replaced at the last minute if, for example, the conference cannot continue without it. The devil is in the detail and making sure you know all of the fine print is important.”

Top tips

Read every contract thoroughly, says Hattingh. “Make sure you understand what is expected from you and what is covered by who. Thereafter, keep in mind what responsibility you are assuming and then take out the necessary insurance to cover the event adequately.”

Budget for insurance, making it a line item from the very beginning, Hattingh adds. “That way everyone is clear about what the costs are and there are no shocks to be dealt with or chances taken by not insuring adequately in an attempt to cut costs.”

Erasmus says prioritising insurance means ensuring you spend enough time on it. “It should not just be a box being ticked. Make sure you know what the exclusions are and what the impact will be on your business if an incident should happen.”

Claims and payouts following an incident at an event are not always widely publicised. “There is a certain oblivion about the amount of cases that are brought following an event, which, in turn, results in organisers being very casual about it,” says Hattingh, who this year alone, has worked on claims of R13 million and R5 million respectively.

“Underestimating the importance of insurance can be dire,” she says. “Don’t take chances.”