By Brent Carris, Research Assistant, Insurance Information Institute
On Sunday, June 3rd, the Governor’s Ball Music Festival (Gov Ball), a three-day event on Randall’s Island in New York, fell victim to the perils of inclement weather. After delaying set times by nearly seven hours, it was subsequently announced to the attendees that all were to evacuate due to the inclement weather forecast. What followed was a mass exodus of frantic festival-goers trying to get off the island.
Gov Ball organizers announced that they would be offering full refunds to everyone who bought a Sunday ticket (prorated if they had purchased a three-day pass). As 150,000 visitors flocked to Randall’s Island for Gov Ball in 2017, according to a Founder’s Entertainment white paper, this could result in roughly $19 million in refunds.
But the event organizers won’t be on the hook for the full cost of those refunds as they likely have event cancelation insurance. Event cancelation insurance typically costs 1 to 1.5 percent of the overall cost of an event, and provides cover for cancellation, abandonment, interruption or postponement of an insured event for reasons beyond the control of the event organizer.
In 2017, we witnessed the worst of a music festival gone awry with the infamous Fyre Festival (Fyre). While the Fyre debacle was largely due to the organizers’ lack of planning, the outcome taught mega-festival organizers what not to do and how to best prepare for uncontrolled disturbances.
Ideally, risk and claim specialists tour facilities far in advance to mitigate any potential dangers and to keep all attendees safe. Determining the size and type of insurance coverage means understanding the risks of the specific event.
As noted in this Insurance Journal article, mega-events like Coachella and Lollapalooza will take on at least five kinds of insurance policies: cancelation, including terrorism coverage, general liability, umbrella policies, workers’ compensation, and business auto coverage. Additional coverage can be bought for crime, errors and omissions policies, directors and officers’ policies, and if applicable, film insurance.
When all goes well, a music festival means great music with great friends. However, when weather doesn’t agree or emergency strikes, the result can be a calamity for the festival organizers and the attendees.
Used to be, hackers would spend most of their time hitting big companies with deep pockets and troves of customer data.
But the times have changed. Launching a hack is as cheap and as easy as never before. Because of this, lots of hackers are playing small-ball by going after small businesses.
Their calculations make sense. A ransomware payout might only be a few hundred dollars, but if hackers can hit hundreds of businesses simultaneously, their ill-gotten loot adds up pretty quickly.
Small businesses know they’re at risk. According to a recent Insurance Information Institute (I.I.I.) and J.D. Power 2018 Small Business Cyber Insurance and Security Spotlight Survey℠, 70 percent of surveyed businesses said that the risk of being victimized by a cyberattack is growing at an alarming rate.
But only a minority have cyber insurance. Only 31 percent said they have cyber insurance – and 70 percent said they don’t have plans to purchase a policy. (Commercial cyber insurance varies across policies but will usually cover expenses incurred from a data breach, like lost revenue, legal costs, and crisis-management.)
Meanwhile, we found that 10 percent of respondents said they have experienced at least one cyber incident in the prior year. To give you some perspective, that’s about the same rate as drivers get into auto accidents.
Imagine getting into an accident and not having auto insurance. It’s an expensive proposition. The same goes for cyberattacks – we found that the average small business cyber losses for the past year were $188,400. That’s a lot of money for a small company to absorb.
As hackers continue to get nimbler, the need for small businesses to have cyber insurance will grow. It’s incumbent on insurers to educate their business clients about the value of cyber coverage.
And the value is there to see: 97 percent of our survey respondents who had cyber insurance and were hacked said that their coverage was good enough to make them whole again.
Soccer fans are eagerly anticipating the 2018 World Cup to commence in Russia on June 14. The monthlong competition presents significant risks ranging from kidnapping, to cyberattack, to event cancellation, and without insurance it’s unlikely an event such as this could take place.
The London insurer Beazley, estimates that construction related risks are insured for $2.5 billion, event cancellation, including loss of TV rights and sponsorship, for $1.6 billion and terrorism and acts of violence for $1.3 billion. Star players are insured for injury for up to $200 million each.
“Without insurance there would be no World Cup, no Olympics or little organized competitive sport”,
said Michael Furtschegger, head of entertainment international at insurer Allianz Global Corporate & Specialty.
By James Ballot, I.I.I. senior advisor, special content projects
The conversation about marijuana use has evolved. Once, in the not too distant past, we (meaning our appointed civic leaders, parents and other authority figures) had the luxury of taking an absolutist stance about weed. Fast-forward to today, and the discussion is mostly a constructive exchange between or among parties invested in positive outcomes, and willing to embrace wide-ranging points of view.
Marijuana users—particularly persons permitted lawful therapeutic use of cannabis—are both empowered and motivated to pursue legal protection from discrimination potentially caused by employer “zero tolerance” policies.
So, what’s an employer to do? In “Marijuana, the Workplace and EPLI – Clearing the Haze,” Mindy Pollack, J.D., Product Specialist and Vice President in Gen Re’s Treaty department, lays out a few hypotheticals to clarify the situation (i.e., legal use of cannabis by new hires and employees). She also identifies solutions like EPLI policies that offer coverage against claims, as well as guidance for how employers can tailor conduct bylaws to better fit the new realities as legal marijuana use becomes the norm.
In short, the courts are split on discrimination claims related to marijuana use. That leaves employers with no single answer when the marijuana question comes up. Add to that the variations in state laws and workplace scenarios, and you have even less clarity.
Risk management services are an important way cyber insurance adds value for small businesses, according to a new I.I.I. paper.
In Protecting Against #Cyberfail: Small Business and Cyber Insurance, I.I.I. co-authors James Lynch and Claire Wilkinson say:
“The provision of these types of services is considered a growth area in the cyber market for SMBs, where price may be a barrier to insurance coverage in the first place. For larger companies, cyber-related risk management services may be offered at a discount or for free.
Also heard at the Advisen Cyber Risk Insights Conference in NYC last week: part of the value proposition for SMBs is that cyber policies offer solutions, not just coverage.
Andy Lea, vice president underwriting for E&O, Cyber and Media, CNA, told the conference: “The value proposition is more prominent with SME and middle market companies that just don’t have resources available in-house to manage risks. This is an opportunity for brokers and carriers to add value.”
In the third week of National Cyber Security Awareness Month, Insurtech Insights newsletter by CB Insights gives a timely update on the cyber insurance market, and where startups are playing in this growing industry.
It notes the “tremendous opportunity” to sell cyber insurance to small businesses.
A recent Better Business Bureau study estimates that 15 percent of small businesses have cyber insurance. BBB Accredited Businesses are almost three times as likely to include cybersecurity insurance.
Fortunately, about nine out of 10 businesses reported to the BBB they have some cybersecurity measures in place, with the most common ones: antivirus; firewall; and employee education:
What are companies doing to protect employees against harassment? This question has added weight after the October 8 firing of Harvey Weinstein by the board of Weinstein Co. following reports of sexual harassment complaints against him. Earlier firings at Fox News and Uber have also brought the issue into focus.
From MarketWatch: “Companies are increasingly buying insurance, including employment practices insurance to cover costs associated with employment lawsuits,” said David Yamada, a professor of law and the director of the New Workplace Institute at Suffolk University.”
Some insurers are also providing training materials for companies to teach their employees about sexual harassment in hope of avoiding it, Yamada added.
Per this 2016 Betterley report, more insurers are partnering with vendors to offer risk management services, such as training and education, consultation and outreach to insureds:
“EPLI value-added services remain an important part of the product when done right, offering employers access to tools that can truly make a difference in the frequency and the severity of claims—as well as the bad feelings that accompany employee/ employer disputes.”
Gross written premium for employment practices liability insurance (EPLI) increased to $2.1 billion in 2015, according to MarketStance data.
I.I.I. information on EPLI coverage is available here.