Event Cancellation

Event cancellation Insurance will cover any expenses or lost revenue that an event promoter might stand to lose if the event they are holding or attending is cancelled, abandoned or postponed for unforeseeable reasons beyond their control.

Types of events that may be covered

  • Sporting events and competitions
  • Trade shows, conferences and lectures
  • Festivals and fairs
  • Film, television and premiers
  • Concert tours
  • Corporate functions and community events
  • Weddings and other special family gatherings

The type of incidents that could endanger an event

  • Inclement weather
  • Natural catastrophes, such as earthquake, flood and fire
  • Structure damage
  • Utilities failure
  • Strike risks
  • Terrorism or threat of terrorism
  • The inability of speakers, performers, teams or exhibitors to appear
  • National Mourning – sometimes excluded
  • Communicable disease – sometimes excluded

In certain circumstances and when dealing with some insurance companies, there may be exclusions:

  1. Actual or threatened use of Biological/Chemical weapons
  2. Losses attributed to or arising from Severe Acute Respiratory Syndrome.
  3. Lack of sales, response or reduced attendance
  4. Variations in exchange rates or currency stability
  5. War and therefore civil commotion
  6. Losses resulting from National Mourning
  7. Financial Failure, insolvency or default, support or Withdrawal of support by any party
  8. Acts of Terrorism – a policy can be extended to include this cover.

Examples of possible major impacts:

National Concert Tour

The terrorist act of 9/11 resulted in the event cancellation of 1000s of functions including national touring groups.  The tour postponed 4 concerts but was able to make them up one month later.

These days with everyone downloading music, recording artists are having to tour more often to recoup losses.  They therefore have the high expense and risks associated with touring.

The reality of today’s music industry is that many recording artists have a very short window for top earnings, but when they tour, they are incredibly productive.  As a result, non-appearance coverage has become more popular, especially when a big act goes out on the road.  To make sure they are covered, the artist’s management has to figure out the potential income from tour guarantees plus percentages put up by the promoters.   They then factor in what the loss would be if the artist failed to complete all or part of the tour.

According to Pollstar, in 2012 the top 50 tours alone brought in a combined $3 billion.  Factors taken into account when assessing the risk is the artist’s prior non-appearance record.  In addition the tour schedule and where the artist is in their career financially.  There are however many aging rock stars (many over 50) touring these days.   Furthermore, the decades of screaming and back-stage indiscretions take their toll. This increases the chances of tour cancellation due to health problems.  Vocal hemorrhaging, vocal cord infections and inflammation.

Dr. Joseph Sugarman, one of the country’s leading ear, nose and throat specialists has assisted many recording artists over the years and says that the most common throat problems stem from upper respiratory infections, which cause the vocal cords to swell.  The fact is that performing with swollen vocal cords compounds the dangers.

Singers are at high risk as every time they use their vocal cords to sing or speak, one vocal cord vibrates against another.  The louder the voice is used, the more violent the collisions.  The higher the pitch, the more frequent the collisions.  Dr. Lee Akst, a laryngologist of the John Hopkins Voice Centre in Baltimore, explained that recording artists constantly on tour are at high risk to develop vocal cord problems.

Other physical problems can result in event cancellations and non-appearance.  According to Billboard, Lady Gaga, during her 2014 “This Way Ball” concert injured her hip resulting in the subsequent refund of tickets worth about $25 million.

A stadium tour like Lady Gaga’s employ well over 100 crew members.  They require local support staff and involves top-level partners like promoter Live Nation, which pays staggering upfront costs that it hopes to recoup over the course of the tour.  So what happens when the show cannot go on?

Travel delays may cause a major problem for touring recording artists.  During Madonna’s 2008-2009 “Sticky and Sweet” tour, she was traveling from Europe to the United States to South America with her four 747s full of cargo.  One of the planes was n’t cleared for flight from Mexico City to Buenos Aires and the show had to be postponed.

Physicians’ Group Annual Convention

Buying event cancellation insurance based on 100% of their gross profit potential also guarantees them continued year-round operations in the event of an interruption or cancellation of their event.

Film Production Company

Filming outdoor scenes in the Northeastern US in late April is chancy.  In addition, spring ice and snow storms can bring the production to a halt.  By ensuring the entire budget with event cancellation the production company is thus able to ensure against bad weather and cast non-appearance.

Circles Group expects demand for film insurance packages to increase in the next five years, as film budgets in Asia are increasing and co-productions with western producers.  Foreign investors are increasing.  This will drive demand for more sophisticated event insurance products which are tailored to local needs.

Major Golf Tournament

Faced with paying appearance fees to certain high profile players, the tournament organizers therefore want to make certain, in the event of cancellation, they are thus reimbursed their fees.  Concerned only in insuring their out of pocket expenses, they may also elect to buy a policy based on expenses only, not gross receipts, thereby significantly reducing the premium charged for the policy.

Car Insurance Fraud

The festive season requires extra monies for Christmas gifts and elaborate celebrations. Price hikes intensify in January. School fees, household and vehicle insurance increases. Therefore this makes car insurance fraud attractive to certain types of individuals.

Car insurance fraud is illegal in all 50 states in America. Insurance companies do all they can to investigate and expose car insurance fraud. The following are some ways these scams are committed: –

1. “Owner-give-up”, i. e. vehicle dumping where an owner disposes of the vehicle by leaving it somewhere, dumping it into a lake or river, burying it or even selling it. A claim of theft is then submitted to the insurance company, thus an owner committing car insurance fraud.

When the car is sold before a report of theft is made, the fraudster will claim that the vehicle was stolen and thus obtain funds from the insurance company. Extra monies too from the sale of the original vehicle.

2. Sometimes mechanics use shoddy parts to repair a vehicle. They also  present an over-exaggerated parts and/or labour claim to insurers. Some resort to fabricating the extent of the vehicle damage.

3. Another car repair scam involves the replacement of airbags after an accident. The repairers stuff the compartments with objects with items such as beer cans or pack in peanuts to keep the sensors activated. California passed a protective law against such practices and as a result the guilty party could face a year in prison plus a $5000 fine.

4. Fake traffic deaths or collisions staged by fraud rings may result in false or exaggerated claims. The group may consist of claims adjusters and dishonest officers who create bogus police reports to process claim application.

5. A well-known tactic swindlers use is to drive to a bustling junction or roundabout and apply brakes sharply therefore causing a motorist to collide with the back of the fraudster’s vehicle. Accusations of fast driving or tail-gating is labelled as the reason for the collision.
Claimants may use a “recruited” doctor to diagnose whiplash or other soft-tissue injuries. These are difficult to dispute later.

Many people do not realise that loss indicator insurance agents have “red flags” they look for in possible scams:

– A claimant who is totally unflustered after submitting a large claim.
– Hand-written receipts for repairs on a covered item.
– An insured who increases auto insurance coverage shortly before submitting a claim.

Many insurers have Special Investigation Units. Employees who work in SIUs generally have backgrounds as detectives, police officers and medical personnel. Insurers are now using social media on suspicious claims. Perhaps the claimant who said his car suffered hail damage will be bragging about his deception on Facebook or Twitter.

Car insurance fraud is not just a problem for insurance companies. It is your problem too. According to FBI statistics, non-health insurance fraud costs $40 billion annually, which you cover by paying annual premiums $400 to $700 higher than they would be if there were no fraud at all.

In 1993 The Coalition Against Insurance Fraud was founded. This organisation collects information on insurance fraud. Through its unique work it empowers consumers to fight back. It helps fraud fighters to detect this crime. The Coalition deters more people from committing fraud. It has information, research and data services and insight to help the anti-fraud community.

Genes and insurance

A genes test could inform you about the increased risk of certain diseases. More people may want to take this test. However, the insurance industry is displeased about these tests.

People can order these tests online. A company in California 23andMe has already collected more than 4000 litres of sputum since 2007. 23andMe is a privately held genomics and biotechnology company in Mountain View, California. The company is named for the 23 pairs of chromosomes in a normal human cell. In 2007, 23andMe became the first company to begin offering autosomal DNA testing for ancestry. Two million people were given information about their ancestry and health risks.

23andMe received regulatory approval to screen for risk factors related to ten diseases and conditions. These diseases include Alzheimers and Parkinson’s.

Insurers want to have access to this information about genes. This information will harm the companies.

On the other hand, consumer groups feel that insurers will use genes information to exclude people from coverage. These advances will, however, impact insurance companies. These tests could influence medical as well as financial decisions. A person who has been shown to potentially have the risk of getting a critical illness could take out critical illness coverage, which pays a lump sum on diagnosis.

A person who has the risk of dying at a young age may take out a well-paying life assurance policy, payable upon his death to his spouse or relatives. Predictive tests need not be disclosed, unlike diagnostic tests.

Asymmetry information is when a customer knows more than the insurer. This is an insurer’s nightmare. On the other hand, for health and life insurers, who want to keep people alive and well, this information could be invaluable.

Discovery, a South African health insurer, plans to offer customers a test that maps part of their genome. The focus is on “actionable data” where medical intervention or lifestyle change that could mitigate risk.

High tech features

High-tech features on cars drive up insurance rates. The blind-spot monitoring, as well as backup cameras, are some of these features. We feel safer but with that comes a heavy price.

With lower gasoline prices, more miles are driven now. With more miles, comes increased risk of accidents.

The Information Insurance Institute admits that these high tech devices are expensive to repair. An example is the repair of a bumper. A 2014 model car bumper repair costs $1,845. In contrast, the cost for a 2016 model is $3,550.

Parts on 2016 vehicles are 130% higher. Labour costs are 18% higher.

Consumers are advised to check out insurance rates before purchasing a new vehicle. Other changes in life should also be considered. For example, marriage and a job change.

Michigan has a ‘no-fault’ insurance system. It is notorious for its high insurance rates. Other factors that result in higher car insurance rates are distracted driving, faster driving and legalized marijuana. Texting and cell phone usage are additional problems.

Some drivers have developed a false sense of security due to high tech assistance and are therefore less attentive when driving. A high tech feature such as antilock brakes did not reduce accidents but resulted in more aggressive driving. Drivers rely heavily on this feature. The same applies to collision warning systems.

High tech safety/driver assist systems on many new cars today as mentioned before, cost a lot to fix. Sensors and cameras are located in vulnerable places such as grilles and bumpers.

There is another factor that has yet to be built into new car insurance. This is the cost of hacking into new car systems. This will further increase the cost of vehicle insurance.

Cyber exposure

The fastest growing peril faced by businesses today is cyber exposure. Firms are driven by data and are dependent upon technology.

Occurrences in 2017 highlighted cybersecurity issues. Furthermore, we were shown how vulnerable we are to the hacking of our personal information. Hospitals, voting records and school districts were targeted. Not only were US consumers the focus of the hackers but also another 150 countries.

Three hundred thousand computer systems across the globe were affected by the malevolent Wannacry, NotPetya and Equifax malware. They caused extensive business interruption losses.

Brad Gow, global cyber product leader at Sompo International has warned that a threat could come from a dozen different directions. Cyber experts view the industry as unprepared for cyber exposure due to a lack of experience and data. This is troubling in a continually evolving cyber risk environment.

The NotPetya malware was composed to attack corporate networks. It used a hacked version of a well-known accounting program in Ukraine. It destroyed data and filesystems within each computer.

Most of the attacks happened in Ukraine and Russia. Losses amounted to hundreds of millions of dollars within a few weeks. However, business interruptions continued for months.

Brad Gow said that fortunately, it had not been a true zero-day event. If it had been, this would have turned the cyber insurance market on its head. A zero-day attack happens when developers have not had time to fix a recently discovered software vulnerability. Therefore, there is time for hackers to take advantage of the security gap.

Equifax Inc. expects the 2017 data breach costs to top $275 million this year. Reuters has stated that this could be the costliest hack in corporate history.

In May 2017 WannaCry targeted computers running Microsoft Windows operating system. Data was encrypted and then Bitcoin ransom payments were demanded.

It appears that companies are taking cyber insurance more seriously since the above attacks.

Maersk, a transport and logistics company, lost more than $200 million due to the NotPetya attack. As a result, the company has said that they are taking cyber insurance coverage very seriously.

Active shooter insurance

The McGowan Companies began selling active shooter insurance in 2016.  17 people were killed and a dozen injured on the 14th February 2018 at a Florida high school.

Subsequently, seven South Florida school district has bought $3 million active shooter coverage. Calls are received daily by the broker Paul Marshall of McGowan.

This insurance pays up to $250 000 per shooting victim. Building damage is also covered. It includes office buildings and concert halls. Furthermore, the insurance takes into consideration not only death but serious injuries such as total disability and loss of sight.

Many organisations are vulnerable to active shooters. These include educational, religious institutions, retailers and healthcare facilities. These places are difficult to secure. In addition, a high volume of people is often present every day.
Therefore an armed individual is able to enter unchallenged.

Additional costs include victim lawsuits, legal fees, medical expenses and trauma counselling. Companies hire Media consultants.

Accountants handle charitable contributions.  Buildings as well are reconstructed where bloodshed occurred.

Some desperate families were forced to crowdfunding sites. For instance, Roger Borges is using GoFundMe to raise $1 million for his son Anthony, a Parkland student who has undergone eight surgeries since being shot five times during the massacre.

Anthony has insurance through a government-sponsored program for children, but it is, however, unclear how much it will cover.

Premiums are $1,400 per anum for $1 million coverage for a small private school. A large public school district could be quoted $50,000 to $100,000 per year for a $5 million to $10 million policy.

The building at the Parkland high school where the shooting happened, will be replaced at a cost of $25.3 million. This safety law was signed on 9th March 2018.

According to Church Mutual Insurance Co., customers have called wanting to raise coverage up to $300,000 per victim per violent incident.

The vice president of Special Markets Insurance Consultants also said his firm was considering a name change for its Active Shooter Insurance policy. However, he concluded that these occurrences cannot be sugarcoated as they are what they are.

AI

The insurance industry has data at its centre.  Data is gathered in large amounts on a daily basis. In addition, this process happens at a tremendous speed.  AI and machine learning are transforming the industry. Human-like machines are thus being built.

According to surveys, humans do not, however, mind interacting with a bot.  Consumers are satisfied to get computer-generated insurance advice.

Tata Consultancy Services has invested $124 million in AI. Other industries invested on average $70 million.

Many claims, customer queries and huge amounts of data resulting in the insurance industry being a natural use case for AI.

* Claims are handled rapidly;
* AI identifies patterns in data and can, therefore, find fraudulent claims;
* The collection of this data helps with risk evaluation;
* Powered chatbots replace human assistants. This results in fast and efficient customer service;
* Chatbots are able to obtain customers’ geographic and social data. This increases personalised interactions;
* Wearable sensors will lower premiums for less risky behaviour. This includes driving and exercising.

Claims can be forwarded through a mobile app, photos taken of the accident and the claim submitted instantly. Trained algorithms via pictures from past claims can estimate the cost of damage.

Siri, Alexa and Google have become part of our daily lives. Through voice recognition, tones and emotions can thus give clues regarding customer service and fraud detection.

In addition, by means of past pattern analysis and actions, AI can recommend suitable action to management on how to retain a customer. Furthermore, additional recommendations can be made in which additional insurance products to sell to the client.

A Gartner report furthermore predicts that by 2020, 85% of interactions with customers will occur without human involvement. In addition, the savings by using bots instead of humans would be passed onto the consumers by means of cheaper premiums.

Drone Insurance

 Insurers now offer drone insurance to businesses who fly drones.

A startup called Verifly is available to drone users with a new mobile app.

The co-founder and CEO Jay Bregman said that he and co-founder and CTO Eugene Hertz  designed a user-friendly app. This app will meet the drone insurance needs of drone operators.

The Verifly app draws a quarter mile circle around users. It analyses information from Verifly’s geospatial and weather databases. The user is shown the estimated risk. A price is set for the drone user on a policy. This can be purchased on-the-spot. If a price is agreed upon, users pay with a credit card.  They get $1 million in 3rd party liability coverage with $10, 000 invasion of privacy coverage.

Unmanned Risk Management, the largest underwriter of aviation insurance in the world has insured  drones in all 50 U. S. States.   They also give insurance for drones for the seven film operators that received a Section 333 exemption from the FAA to use drones on Hollywood movie sets.

The FAA said that existing aviation regulations, give it the authority to ban commercial drone flights that have not received waivers to operate. The agency has issued fines against an unspecified number of drone operators.

In other cases the FAA has worked with law enforcement agencies to contact people who have operated drones that were unsafe or unauthorised.

Harry Arnold, owner of Detroit Drones, said he is hoping the FAA rules go into place as soon as possible. That has not stopped him from running a drone photography business for the last five years.  His website includes aerial video of real estate developments, construction sites and a car race.

Arnold, who said he does not have an FAA waiver, disputes the agency’s authority over commercial drone flights with regulations still incomplete. While some drone entrepreneurs may see their wings clipped once the FAA’s new restrictions become finalised, tighter standards are good news for the sometimes chaotic, unregulated industry Miller said.

Before writing drone insurance, Miller requires a drone flier to develop standard operating procedures.  He also requires clients to keep logs of flights and maintenance. Furthermore to have at least a basic understanding of FAA rules for traditional pilots.

Some of his standards in fact exceed those in the FAA proposals. His standards say pilots would have to pass an aviation knowledge test.  They could only fly below 500 feet and also within sight of the operator. There would be no requirements for logs or maintenance standards.

Perhaps most of all, insurers assess the likelihood of an accident involving people, as that is where the possibility of expensive litigation and indemnity payments exists.

Insurers routinely mandate higher safety standards than those set by the FAA for traditional aviation risks.

Electric Vehicles

There are many working parts in an internal combustion engine.  The owners of electric vehicles, however,  do not have to worry about these parts.

Most insurance companies regard electric vehicle drivers as more responsible.  They are therefore less likely to be involved in a car accident. A Chevy Volt costs an average of $1,452 per year to insure. Its non-electric counterpart, namely the Cadillac CTS is approximately $2,024 per annum. The most popular electric vehicle in 2016 was the Toyota Prius C and its annual insurance premium average $1,513 in comparison to $1,801 for a Nissan Altima.

Every electric vehicle is not, however, cheaper to insure.

Many well-known insurers have a problem reacting to new technology, such as electric vehicles, however, there are others who are highly flexible.

Zurich put into motion a worldwide drive which thus put emphasis on the advancement of products and services which would help consumers deal with climate-related risks. The conversion to electric vehicles is part of the solution. The ultimate goal is low carbon emissions. Zurich’s electric car insurance cover includes:

  • 20% discount on an electric car’s insurance premium;
  • 24-hour roadside assistance;
  • In the event of your car running out of charge, you will get free towing to the nearest public charge point or to your home charge point, whichever is the nearest;
  • Your car will be repaired if you have a mechanical failure. You will be towed to the nearest specialist electric car repairer at no charge.

Also. enquire about cable liability.

Does your insurance policy cover the possibility of somebody claiming liability should they trip over the cable and hurt themselves? The cables are short.

Nissan is part of the Renault-Nissan Alliance. Nissan delivers a range of more than 60 models under Nissan, Infiniti and Datsun brands. In 2010, Nissan introduced the Nissan LEAF and continues to lead in zero-emission mobility.

The Renault-Nissan alliance have sold 200,000 electric vehicles worldwide to date. They say that they control 58 percent of the segment. The CEO of the alliance, Carlos Ghosn claims that there are, in his opinion, four reasons why car buyers are making the switch to electric vehicles.

  Owners can make a “recharge” without making a trip. These recharge points include the drivers’ homes and workplaces.

Mr. Ghosn is to have said that the “cul-de-sac” effect is, therefore, helping the market share grow.
Ghosn claims furthermore that the Nissan and Renault EVs have the highest customer satisfaction rates of any vehicle that either company has ever produced to date.

Bitcoin

Bitcoin is an online payment invented in 2008.  It was released as an open-source software in 2009. The system is peer-to-peer. Users can transact directly without needing an agent.  People find this currency attractive as no bank can control it.

Bitcoin. The ledger uses its own unit of account also called bitcoin. The system works without a central repository or single administrator. This has led the US Treasury to categorise it as a decentralised virtual currency. This is the first cryptocurrency.

Bitcoins are created as a reward for payment processing work.  Users offer their computing power to verify and record payments into the public ledger. This activity is called mining. There can only ever be 21 million bitcoins. The smallest denomination is called a Satoshi.  Besides mining,  they can be obtained in exchange for different currencies, products and services.

With an estimated $14 billion worth of Bitcoins in circulation 82,000 merchants now accept this currency.  Eight million users have set up wallets.   These are accounts where they store and manage the currency. The number is growing.

Bitcoins are a way of using and moving money without a bank account or credit card. The currency fluctuates in value against other currencies. Recently, a Bitcoin was worth about $10,571 in U. S. dollars.

Users can purchase this currency, store them in a virtual wallet linked to their smartphone.  They can then scan their account information at participating establishments to pay for merchandise.

Insurers that consider the possibilities of protecting Bitcoin users have other lingering concerns. For one thing, Bitcoin has some volatility. Therefore you can’t have the same approach to storing it as you would a commodity. Volatility in price is one of the things carriers are concerned about. An upward move in price can be beneficial to an owner. It is difficult to understand.  The price movements is a very complex problem for insurers.

Individuals or businesses are protected when holding bitcoins  This is in much the same way a safe deposit box at a bank secures valuable. Once stored in a virtual wallet, the currency can only be moved or accessed through the use of two “keys” – or codes. One held by the Bitcoin owner and the other held publicly. A person could lose the thumb drive that has the private key on it, then they are no longer able to unlock the Bitcoin wallet.

Investment in Bitcoins has been relatively robust. The growth in investment so far in the short life of the currency has been stronger than the growth of Internet-related investments during a similar period in its startup.

Venture capital companies have invested more than $670 million worth of Bitcoins into security-related enterprises. Insurers have viewed Bitcoin use as a cybersecurity risk. There is a distinction between ensuring Bitcoin value and covering the management of a Bitcoin company. The price of the currency cannot be insured but the company could be covered like any other Directors and Officers insurance.

Bitcoin theft insurance is available, however, it is pricey and there are only a few policies. However, over time more people will get involved.   Thus there will be more consistency in the security of the underwriting.

An interesting aspect of Bitcoin is the anonymity of users.  While every Bitcoin transaction is digitally recorded, parties to the transactions are identified only by account numbers, not names. The anonymity seems to be part of Bitcoin appeal for many users.

Any transaction that is done via email leaves an electronic “track” that can be followed back to the user, so the anonymity is hardly complete.

The vast majority of people in the world do not have bank accounts or credit cards, but many of them do have smartphones.

Bitcoins could become a simple and reliable currency for millions of people. Bitcoin is the cutting edge of where monetary systems may be going, although this would not happen overnight.

If Bitcoin is going to survive as a digital currency, it is going to have to convince investors that their holdings are safe. There has been a huge problem lately as two exchanges recently shut down due to hacker attacks.  This attracted unwanted headlines and added fuel to detractors who believe cryptocurrencies are untrustworthy stores of wealth.

Falcon Global Capital, a San Diego firm launched a fund that will offer investors access to insurance should their bitcoins suddenly disappear, as they have for other unfortunate believers operating in the MX GOX or Flexcoin exchanges.