Mass terror threat poses new risk to events
Today’s brutal, shifting terrorist threat is prompting event-cancellation insurers to reassess their cover.
An attack on a rock concert in Paris, a truck being used as a weapon to mow down spectators at a fireworks display in Nice – the rules of the terrorist game are changing and insurers are racing to ensure their policies reflect the shifting threat.
“Today’s terrorist threat is much more widespread than it was in the past,” says Elizabeth Seeger, Contingency Underwriter at Hiscox London Market. Whereas in the past terrorist groups such as the IRA or ETA targeted one country, Islamist terrorists have threatened to launch attacks against numerous European countries, triggering a continent-wide security clampdown unseen since World War Two.
With such a broad threat of events being cancelled in such a febrile atmosphere it’s essential that promoters and event planners have the right cover.
Europe on high alert
For nearly a year, France has been in a state of emergency, which is set to continue until at least January 2017. It grants local government officials and the security services sweeping powers to cordon off entire neighbourhoods, close public spaces and impose curfews if there is deemed to be an imminent threat of further attacks.
Attacks have prompted the cancellation of sporting fixtures, concerts and events far beyond where they took place. The Paris attacks in November 2015 forced international football matches in Germany and Belgium to be called off, while Brussels went into virtual lockdown amid fears it would be the target of an imminent attack.
Even an isolated and short-lived threat could create a big headache: an airport shut down for a couple of hours due to a bomb scare could prevent a band from performing a sold-out concert to tens of thousands of fans, even though the stadium was unaffected.
Broad cover needed for such a broad threat
With such a broad threat of events being cancelled in such a febrile atmosphere it’s essential that promoters and event planners have the right cover. “If I were organising an event then I would want to ensure that my policy wording is sufficiently broad to deal with the range of possible eventualities that concern me,” says Seeger.
“My advice would be that, before buying a policy, an event organiser should ask which risks it is particularly worried about. Is it a terrorist act in the event’s immediate vicinity, an increase in the national terror-threat alert at the time it is being held, or that the country or city in which it is taking place has been the target of several previous attacks? Then the client, broker and insurer can design a policy to fit those specific requirements.”
Hiscox has already helped clients to ensure their events go ahead in spite of last-minute demands for extra security prompted by heightened terror fears. “We’ve paid the extra costs of putting on additional security measures – airport-style body scanners or extra security staff – to ensure a client met the local police’s requirements to allow an event to go ahead,” says Seeger.
Terror now biggest threat for some events
Promoters’ and event organisers’ insurance needs are shifting to reflect the increased terror threat, says Adrian Thomas, Executive Director, Contingency at Aon Risk Solutions. “Although the current terrorism product being offered by insurers is a good one, the threat is evolving. I think there’s now an opportunity to further enhance the product to meet clients’ changing needs.”
Some event organisers now regard a terror attack as their single biggest threat and opt to buy cover for only this risk, so want a more all-encompassing terror policy, Thomas argues. “They don’t care whether a terror attack fits the precise definition contained in their policy wording, they just want to know that they’re covered if it forces the cancellation of their event.” He sees it essentially as “an evolution in the terrorism coverage that the contingency market has been providing since 9/11.”
Some event organisers regard a terror attack as their single biggest threat and opt to buy cover for only this risk, so want a more all-encompassing terror policy
Cover evolving again
Hiscox has been helping event organisers to mitigate a radically shifting terrorism threat since the September 11 attacks. It designed the “time and distance” cover that has become the global standard for terrorism risk in the contingency market. After that, it extended its cover to include the necessary cancellation of events due to the threat of terror attacks, which again has been universally adopted within the market. “We’re already in discussions with our major clients about how to potentially expand the cover to deal with the new issues created by today’s terror threat,” says Seeger.