Insurers warn event managers to make prudent financial decisions

With restrictions on public gatherings and live gigs expected to be eased even further as the country gets to grips with the COVID-19 pandemic, we can expect to see an uptick in such events being organised around the country in the near future.

However, promoters and organisers must consider the risks around these events, including factors such as inclement weather, which could well spoil the party and leave event companies out of pocket, should they not have the right insurance coverage to protect their capital outlay.

“Unforeseen circumstances can put a spanner in the works of even the best planned and organised event. Make sure you are insured with specialists that recognise the enormous financial outlay from production and event organisations, sponsors and promoters,” says Greg Dillon, Lead – Sport, Events, Entertainment & Drones at specialist insurer iTOO.

“Many insurers have tailored solutions to not only cover event organisers’ bottom line, but also their expenses against a range of eventualities. From concerts and festivals to theatrical productions, conferences, conventions, major sporting events, trade shows, fairs and product launches,” says Dillion.

Circumstances beyond their control
Dillon explains that such insurance products typically cover promoters and organisers should an event be cancelled, abandoned, interrupted, postponed or relocated for reasons beyond their control.

“What is usually covered by products such as contingency insurance are occurrences such as adverse weather like storms, torrential rain or flooding, fires, the non-availability of essential services, acts or threats of terrorism and cyberattacks, labour strikes or civil commotion, national mourning and the non-appearance of a person or a group of people who are key at an event,” he says.

“Policy instruments are now available in the market that not only cover these scenarios but includes any reasonably incurred mitigation costs as a result of preventing the cancellation, abandonment, interruption, postponement, curtailment or relocation of an event.”

Dillon points out that inclement weather conditions are becoming increasingly common, as climate change is expected to worsen the frequency, intensity and the impacts of some types of extreme weather events.

“I would say that climate change poses an increasingly serious risk to events organisers and promoters. In some cases, having to cancel an event due to extreme weather could be financially catastrophic for an events company, considering the amount of money that is often invested upfront to ensure that an event can go ahead,” he explains.

KZN floods
Most recently, Dillon notes, South Africans have witnessed the devastating effect of changing weather patterns firsthand. The rainfall in KwaZulu-Natal that resulted in deadly flooding in April was made worse by climate change, according to World Weather Attribution initiative.

“The reality is that heavy rainfall incidents clearly reflect s how human-caused climate change can impact our lives and businesses. Unfortunately, we can expect extreme weather occurrences to become more common in future,” he says.

“Every major event organiser understands the planning, logistics and effort it takes to facilitate a successful event. Today, everything from the weather to politics, makes cancellation and abandonment a possibility that needs to be planned for.”

Dillon says that with the easing of pandemic-related restrictions on events and venues, both indoor and outdoor, large and small, South Africans can expect to see an increasing in the number of gigs, events and live performance that are likely to be organised in the near future. As such, organisers and promoters need to give serious consideration to event cancellation insurance, specifically on weather insurance, to protect them against these risks.

“No matter how well-oiled an event is, unforeseen circumstances can diminish your profits and possibly destroy your reputation,” he concludes.