Following the terror attacks in the French capital, a number of events have been cancelled across Europe, putting the focus on contingency cover.
The tragic events in Paris have sent shockwaves across Europe and beyond. At the time of writing, Brussels is in a state of lockdown as security forces brace themselves for more potential attacks. The French government has declared a three-month state of emergency.
The nature of the Paris attacks, and the ongoing high terror alert, has led to an unprecedented number of event cancellations in France and Belgium such as concerts, sporting events and promotional appearances, including several rugby union Challenge Cup matches and international soccer games, while concerts by U2 and Foo Fighters are reported to have been cancelled.
Contingency insurance exists to provide cover for financial loss that occurs when a planned event has to be cancelled or postponed. Loss of revenue incurred in providing refunds for ticket sales and venue hire costs are just some examples of the net ascertained loss for which insurers may be obliged to pay out.
Most standard contingency wordings contain a terrorism exclusion intended to operate in relation to events cancelled as a result of terrorism, which could well include those impacted in the wake of the Paris attacks. Such exclusions will often preclude claims where property has been damaged (for example, the Bataclan Concert Hall) or threatened to be damaged (arguably the Stade de France).
In addition, a comprehensive terrorism exclusion will include events affected by action taken in "controlling" or "preventing" acts of terrorism, which may include decisions by the French authorities to prevent events from going ahead.
Ambiguities will arise where the organisers of an event wish it to go ahead, but where authorities withdraw an applicable licence, perhaps on the grounds of health and safety concerns, without specific reference to terrorism. Without the licence, the event cannot go ahead.
It may be a difficult issue to determine whether this has occurred as a direct result of the terrorist acts, or more indirectly, which may not fall precisely within a terrorism exclusion. Further, while failing to obtain appropriate licences is often excluded, licence revocation appears rather different.
For events that suffer with reduced attendance due to fear of further attacks, the position is also complicated. The resulting financial losses to the insured by way of reduced ticket revenue and spend on food/drink and merchandise, for example, may fall to be assessed under a reduced attendance coverage that responds where a common cause prevents ticket holders from attending.
However, this could also be caught by the terrorism exclusion where "threat of terrorism (actual or perceived)" is included, or by a disinclination to travel exclusion. Such issues arose after the 9/11 attacks and are likely to be seen again.
Given the unwelcome reality of an increased threat of further attacks in France, and elsewhere, insureds may wish to consider purchasing further protection against terrorism. Terrorism extensions are available in the market, some limited to cover where a venue has been physically damaged and others including the threat of terrorism but usually delineated by the proximity in terms of miles from the venue or days until the date of the event.
Another consideration is standalone terrorism insurance, which provides broader financial cover. In the current climate, there is likely to be increased demand for such products worldwide.
Previously published by Insurance Day
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
