Contingency

In this chapter of our Annual Insurance Review 2022, we look at the main developments in 2021 and expected issues in 2022 for contingency.

Key developments in 2021

The striking point about the update for the contingency market for 2021 is the lack of material on which to base the update.  Whereas the COVID-19 pandemic caught event organisers by surprise in 2020, by 2021 it had become an all too familiar presence.  Although the vaccine development and rollout proceeded faster than many could have imagined this was not enough to lead to the sport, hospitality and entertainment sectors returning to business as usual.  

2021 has seen tension between the desire to return to normality and the need to safeguard against the impact of rapidly changing Government guidelines when faced with an increase in infections, or a new variant of concern.  Football matches played out in front of empty terraces, and Olympic medallists took to the podium without applause from the stands.  Concern in the insurance market meant that most event organisers could not obtain cover for COVID related cancellations, leading to a dearth of events throughout the year.  Although some new entrants came into the market, and some innovative solutions were explored in order to provide cover, the insurance market played a smaller part in the events industry than in previous years.  The Government pilot scheme enabled some summer festivals to go ahead, under strict conditions.

Before the emergence of the Omicron variant confidence was increasing; the recent Rugby Autumn Nations Series at Twickenham boasted crowds of over 80,000 spectators.  There was cautious optimism that there would be no more lockdowns, and that the event industry could start its recovery.  

What to look out for in 2022

The emergence of the Omicron variant, with suggestions that the England-South Africa Twickenham match may have been a super-spreader event, caused the brakes to engage towards the end of 2021.  At the time of writing the symptoms of the Omicron variant appear mild, and cancellation of events arises not due to fear of the variant itself but out of practical concerns driven by the strict self-isolation requirements for anyone in contact with someone infected by the variant.  Cancellation arising from these concerns is unlikely to be covered even if a contingency policy does not exclude pandemics.  Should the variant engender more concern we may see a return to the lockdowns of the past, with the inevitable impact on events.

Despite this end of year setback we expect that 2022 will see an increase in events; perhaps not to pre-pandemic levels, but an increase nevertheless.  The insurance market is likely to play a part in this.  Ever adaptable, we expect that creative solutions will be engineered so that policies can provide some level of protection.  The question of COVID passports is extremely sensitive, but many large events are likely to continue to require evidence of vaccination or a negative test, and we may see requirements based on this find their way into the Policy wording so that insurers are satisfied that robust procedures are being applied.

Written by Naomi Vary.

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