The cancellation of the England v Holland match recently because of concerns over player and spectator safety following the wave of rioting and looting that took place across London and other parts of the UK, brings once again into focus the of importance of sports governing bodies and event organisers having contingency insurance in place.
It is understood that the FA was not covered against event cancellation, and therefore is likely to have incurred significant losses. Sports events are exposed to a varied range of risks, and those risks need to be managed . Everything from the weather through to this type of civil unrest can threaten an sporting fixture. The lead up to an event must involve a thorough risk assessment procedure which should cover all potential event stakeholders, including sponsors, commercial broadcasters, spectators, employees, media and the athletes.
A sports event risk management procedure will identify and grade the risks and the potential consequences of those risks. The risk of rioting causing a cancellation of an England international might be graded as unlikely, but the severity of consequence would be significant. Clearly not all event organisers or sports governing bodies will have the resources (or often the need) to undertake the same level of risk assessment as required by a high profile international sporting event. Indeed, it was no surprise to learn that neither West Ham nor Crystal Palace had event cover in place for their midweek Carling Cup games because those matches, as spectacles, did not warrant it. However, where the cancellation of an event, for whatever reason, will lead to significant financial loss to stakeholders contingency insurance should be purchased. For example, this type of cover is particularly important in the music industry, and last month the Kings of Leon cancelled their US tour which left Lloyd's Insurer Cathedral as the lead under-writer on a £15m exposure. However the band was insured against vast numbers of ticket refunds.
It is always worth bearing in mind the key insurance requirements for any sporting event. They will centre on employers' liability insurance, public liability insurance and contingency insurance.
- Employers' liability insurance is compulsory under the Employer's Liability Act 1969 and best practice states that this should be extended to cover volunteers. Unlike 'normal' commercial industries, sports events tend to attract voluntary staff (the Olympics being a good example).
- Public liability insurance is obviously essential as sports events tend to require interaction with members of the public. It will be for the broker and the event organisers to assess the level and extent of public liability insurance and the layers will inevitably depend on the identified risks. It is always worth keeping in mind that when it comes to events played out in public areas (such as the London Marathon or the Boat Race), and not within the confines of a stadium or grounds, event organisers will need to liaise with local government authorities to ensure all insurance requirements are met.
- Contingency insurance is the most difficult to assess. The knock on effect of an event being cancelled due to a unique set of circumstances (or 'force majeure') can be considerable, particularly from a financial perspective. The number of stakeholders involved in the Bahrain Grand Prix cancellation, or the England v Holland match would have been significant: the event organiser will need to ensure that sponsors, competing teams (and their stakeholders) and broadcasters are adequately compensated.
Comment
There are clearly a huge number of risk eventualities for a governing body or an event organiser to consider and the London riots was another example of a 'flash' incident leading to the cancellation of a sporting event. It is essential that the broker works closely with the organiser (and if necessary the organiser's legal team) during the risk assessment process. The starting point should always be a review of various duties of care the event organiser might owe, and to whom they are owed. Once that information has been gathered, the event organiser, the broker, the lawyers and ultimately the underwriters will be in a position to ensure those risks are covered.
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