Event organisers 'reassessing insurance options because of ash cloud'

25th May 2010

A couple of months ago, few people would have considered how an erupting volcano could grind Europe to a halt. Yet, as the Icelandic volcano Eyjafjallajokull spewed ash into the air leaving the continent a no-fly zone, many event organisers were left assessing the fate of planned conferences and festivals. Some, such as Showtime Music which had hoped to stage a music festival in Shrewsbury, had no choice but to cancel out of the fear that people would not be able to get to the event.

The effects of the volcanic ash will have a long-lasting impact on the events industry, according to Mark Blair, who works as a divisional director at events insurance provider Towergate Coverex.

"I think the biggest thing that happened with the volcanic ash was that if you asked an organiser to list anything that could possibly go wrong when they were arranging an event, this certainly would never have featured on anyone's list of things that they may wish to either manage against or insure against in the past," he noted.

Previously, organisers considered issues such as the "venue not being available" or a "fire just before the event", but the volcanic ash cloud and the big freeze have changed this.

"This has really highlighted the amount of things that could actually go wrong and they should consider everything maybe even if it has never happened before," Mr Blair added.

The consequences of the ash cloud have greatly changed how organisers are thinking about events, he noted.

"I think organisers have now started to look at this area of cancellation and abandonment as being a key issue for them in the future. And, yes, it has meant that we've actually seen a number of people who previously hadn't considered the insurance now coming to us and asking us some really interesting questions."

"[Events organisers are thinking that] maybe we should just reassess the risk and that there could be more than just an issue at the venue," Mr Blair stated, noting that the volcanic ash and the snowfall earlier this year have ensured that more and more event organisers are now considering the transportation and logistical elements.

"We've also seen that people are actually looking to talk about their insurances earlier rather than later. As soon as a contract is signed they are actually coming to us, rather than maybe in the past they would have waited for a little bit of time before they put the cover in place," he noted.

While there has been widespread confusion about how the ash cloud affects people's insurance claims, Mr Blair said that Towergate Coverex was able to cover claims relating to the ash, so long as the policy was taken out before the volcano erupted.

"The insurance policies before this happened all provided cover for this event because it was…sudden and unforeseen and therefore it would have been covered."

"There is a perception that insurers exclude anything as a relating to an 'Act of God' and while this might apply to certain insurance policies we were pleased to inform our clients that they actually did have the cover. It was great to give them peace of mind that their event was fully covered," he stated.

However, as the cloud continued to affect Europe, it was no longer a "sudden and unforeseen" occurrence, meaning many new policies did not cover incidents relating to the volcano. "It may be possible for this cover to be bought back into the policy cover although this needs to be negotiated by the insurance broker," he added.

Although the events industry has had a difficult couple of years with the recession, the big freeze and the ash cloud, Mr Blair is optimistic about Towergate Coverex's and the industry's prospects.

"Many people are still launching shows and looking to replicate their brand overseas and that is something we see as very positive."

"We're actually quite encouraged about the rest of this year and we look forward to helping our clients come out the other side and work towards a successful 2011," he concluded.