Event Canceled Due to Coronavirus: Who Foots the Bill?
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What is the main topic discussed in this episode?
This is your Money Briefing for Monday, March 16th. I'm Charlie Turner at The Wall Street Journal. If a big event gets canceled because of the coronavirus, does the insurance cover the loss?
Some people prior to this outbreak never would have considered something like this and maybe thought, well, I'll buy cancellation insurance and I'll be fine.
What events have been canceled or postponed because of the coronavirus?
But cancellation insurance doesn't uniformly cover communicable diseases.
We'll talk with The Wall Street Journal's Julie Steinberg in a moment.
The coronavirus pandemic has impacted countless events across the globe. Music festivals, auto shows, and conferences have either been canceled or postponed out of an abundance of caution. A major question is, who foots the bill if the cancellation is disease-related? Is it the insurer or the event organizer or the community where it's being held?
Who is typically left paying when an event is canceled due to a disease?
Joining us with some answers is The Wall Street Journal's Julie Steinberg. So, Julie, the big question, who tends to be on the hook in these situations?
Unfortunately for the companies and event organizers, it tends to be them. And that's because many of them tend not to purchase specific insurance that's related to what are called communicable diseases under which something like the coronavirus would fall.
Why wouldn't events be covered by insurance if they're canceled because of the coronavirus? What makes this different from being covered from an earthquake or some other natural disaster?
So it all comes down to how prepared you are. And based on conversations I had with insurance brokers and executives, it can really be 50-50 for some of them on who actually ends up buying specific insurance for this. So some people prior to this outbreak never would have considered something like this and maybe thought, Well, I'll buy cancellation insurance and I'll be fine. But cancellation insurance doesn't uniformly cover communicable diseases. So you'd have to pay extra in order to be covered under that sort of scenario.
Why don't standard cancellation policies cover communicable diseases like coronavirus?
And in many cases, companies just didn't choose to pop to top up with that extra insurance.
And that's just too expensive.
For some organizers, yes. We spoke to the managing director of the Geneva International Motor Show, which was canceled earlier when Switzerland banned certain gatherings over a certain size. And he told us that to procure insurance for his event, it just would have been way too expensive. And now organizers and exhibitors for that event are on the hook for double digit millions. South by Southwest, which is a very popular Austin, Texas festival. They've said their insurance didn't cover the disease-related cancellations. We also know that MWC Barcelona, the trade show, said the event had comprehensive insurance coverage, but it was not covered, or coronavirus specifically wasn't covered. So basically, you can talk to any high-profile cancellation right now, and they're all grappling with the same issue
And the issue is only going to continue as more and more events are postponed or canceled. I did talk to Six Nations, which is the rugby tournament. And they said so far they haven't put in an insurance claim. They had to postpone some of their matches.
Which high-profile events reported insurance gaps and large financial losses?
And they said their matches will be rescheduled. And in that case, they may not have an insurance issue. But I would not be surprised if we see more and more companies having to pay up on their own for this.
Is anyone trying to challenge the insurance company's decisions?
Can organizers successfully challenge insurers or file claims for disease-related cancellations?
Yeah, so we're expecting a lot of companies to try to scrutinize the fine print and lodge claims to see what they can get. A spokesperson for Art Basel, whose Hong Kong event was cancelled, said that they're in active discussions with their insurer related to coverage. So, so far, many insurance companies have had earnings and have said that the coronavirus hasn't impacted their business, their bottom or top lines too much yet. And they haven't seen a huge swell of claims. But we expect more claims to come in. Whether they'll be successful is another story. And based on our research, it seems like many will not be.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:06–0:27
2
What events have been canceled or postponed because of the coronavirus?
0:27–1:06
3
Who is typically left paying when an event is canceled due to a disease?
1:06–2:13
4
Why don't standard cancellation policies cover communicable diseases like coronavirus?
2:13–3:27
5
Which high-profile events reported insurance gaps and large financial losses?
3:27–3:41
6
Can organizers successfully challenge insurers or file claims for disease-related cancellations?
3:41–4:25
7
Under what specific conditions would disease-related cancellation insurance actually be triggered?
4:25–5:23
Speakers
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