The world’s top music stars have been warned that they will undertake future global tours at their peril as insurers will be unwilling to provide any type of cover against a future pandemic.
Paul Lawrence, Chief Underwriting Officer at Hiscox warned that while Elton John has announced a worldwide farewell tour to begin next year will go ahead without any cover for cancellation due to COVID or a future pandemic. The singer will begin a 55 date tour of the UK, Ireland, Europe and North America later this year adding to stadium dates that had been postponed during the COVID pandemic.
Speaking on a webinar organised by rating firm Standard and Poor’s Lawrence said a one off event would likely be able to access cover but that the insurance sector would not have the capacity or the will to offer insurance for lengthy worldwide tours.
When asked whether there would be the likelihood of a pandemic facility being created in the wake of COVID Lawrence said there were real issues for the market given the lessons learned over the past 18 month.
“There may well be two different covers. For broad brush business interruption coverage for SMEs affected by government action, I believe the market is simply not strong enough to provide it.
“We have seen pandemic exclusion written into every reinsurance programme we have renewed.”
He added: “I doubt Elton John will ever buy a pandemic cover for an 18 month world tour. For a specific event, on a specific date, at a specific venue and with a specific number of people then I think it will be able to access cover because it is very much a known exposure.
“But for worldwide tours over one to two years in multiple venues I do not think the market has the capacity or the appetite to provide pandemic cover.”
Jillian Williams CUO and Head of ESG at Leadenhall Capital Partners said that the broad brush covers were now a thing of the past but that the industry need to look at the solutions it could provide.
“It might need to go back to simple definitions. Parametric covers may well have a role to play in any future solutions.”
Lawrence added that he saw a future spike in the costs of cyber cover in the wake of recent major events and added that global governments may well need to act on the threat of ransomware attacks.
“In terms of cyber cover, at Hiscox, we have seen an acceleration of rates,” he explained. “In 2020 we saw rates at plus 10%, in the first quarter of this year it was plus 25%, and at current renewals we are seeing plus 100%, as market capacity plateaus.
“The rise is not caused by a withdrawal of capacity rather that companies have more cyber risks and as such are looking for higher limits.
“It is different to the BI debate over what is or isn’t covered. If Amazon cloud services goes down it will trigger every cyber policy. There is no argument around coverage in cyber, it is covered.
“As such boards are examining their cyber strategies. Nobody wants to be caught out again like they were with COVID.”