Monday 18 August 2014 – Whether it’s a 150 mile race across the Moroccan desert or an ultra-marathon in the heat of California’s Death Valley, gruelling endurance and extreme sports events are growing in popularity. Robert Murphy, Global Entertainment & Events Practice Leader for insurance broker Marsh, explains how insurance and risk management helps keep such events safe. (source: Lloyd’s of London)
Events seem to be getting more unusual and extreme. Is this something you have seen?
Mainstream sports are as popular as ever. But we do now see a much wider range of events looking to buy insurance than was the case some ten years ago. For example, there has been a huge increase in extreme sporting events in the US, such as endurance events like ultra-marathons, cycling, and swimming, as well as the more extreme sports like cliff diving or kite surfing.
Why are events getting more extreme and unusual?
For organisers, it’s about creating an environment that people enjoy, but are also involved with and that are challenging. There is a lot of competition to attract participants and spectators, and if events follow the same pattern each year they become stale. So organisers keep on having to reinvent their events or create new events to stay relevant for today’s generation.
What type of events do you see?
Participation events have been skyrocketing – people don’t just want to watch events, they want to take part. As I mentioned, we have seen a dramatic increase in the more extreme events in the US that test people’s endurance and athleticism. It’s a mix of the competitive atmosphere and genuine competition.
How does this translate to risk?
There is a direct correlation between the challenge of an event and the risk. People have to be in the right physical and mental condition to participate, especially in the more involved events. There are a lot of requirements that need to be thought through and implemented to keep people safe.
What do you see outside the US?
Generally, events are getting bigger and more complex, and they are also getting more diverse. This is not limited to North America, it’s a worldwide trend.
Is risk management important for these more extreme events?
Definitely. No matter how unusual and non-mainstream an event is, it will still have to ensure the safety of its participants and spectators. In fact, the more unique an event, the more important good risk management becomes. Organisations are very focused on protecting their brand. We work closely with organisations on the many important areas of risk management.
How do the more unusual events differ in terms of risk?
Established sporting events have a whole checklist of safety procedures to follow, but these newer and more extreme events do not always have a play book. So they have to anticipate and plan proactively what could occur from a risk management perspective, and learn lessons as they go.
Is insurance an important consideration for extreme events?
Yes. For all of the events we have been involved with, insurance and risk management is a top priority for the organisers. In recent years there has been something of an evolution in risk management principles and insurance for events, and most organisers do a good job of protecting themselves and others. It is important to make sure that organisations identify and evaluate and understand their risks and that they have an insurance program that provides broad coverage.
What insurance cover do extreme events typically purchase?
Organisers will certainly look to insure against third party liabilities, but we have also noticed a growing trend for organisers to purchase personal accident cover for participants, especially in the more extreme events. Interest in event cancelation insurance has also grown as the financial implications of a disruption or cancelation increases as these more unusual and extreme events have grown in popularity.
As extreme and unusual become more popular, does insurance become more important?
Many events start life as local informal events but as they grow they reach a point where the organisers need to protect their revenues and balance sheet. And as events have grown in size the financial metrics increase, and organisers increasingly look to protect themselves. So we have seen growth in limits of liability purchased, and a lot of thought goes into buying the right kind of insurance.
Do specialty markets like Lloyd’s have an important role to play in providing cover?
In many situations events are insured locally, but large events that require higher limits, and for the more challenging and unusual events, customers will go to international insurance markets like Lloyd’s. These types of events require specialist underwriters that understand the risks.