An influx in market competition and a perceptible shift in risk associated with sports and entertainment venues have given insurance agents the opportunity to provide greater comprehensive, quality service to these accounts, say leaders in the space.
Perhaps the greatest evolving risk affecting public venues is the threat of mass violence. From 2000, to 2013, the FBI measured 160 active-shooter incidents, defined as an individual or individuals “actively engaged in killing or attempting to kill people in a confined and populated area.” During the first seven years of the data set, 45 such events were recorded; that ballooned to 115 events during the last seven years.
These and other acts of mass violence have caused greater need for liability, business interruption and property coverage. The ideologically motivated nature of many of these crimes is also leading some to consider standalone terrorism coverage.
Insurance agents must be aware of these new realities when handling coverage for any venue, from stadiums to convention centers, and movie theaters to music halls, said Lita Mello, senior vice president with managing general underwriter K&K Insurance.
“Things have been happening all over the US, including the shooting incidents in California and Florida, that have brought the risk level with these facilities a little higher because they can host a large number of patrons,” said Mello, who leads K&K’s recreation division in providing program-based coverage for these and other accounts.
The increase in risk has meant some rate increases for facilities with a loss history, but many venues have mitigated their risk by upping security. Many have hired police and undercover officers, while others are training all employees in security protocol. Advising on these risk management activities will help an insurance agent increase their value to the insured, as well as potentially secure more favorable coverage.
As for the terror quotient, Mello says an increasing number of risk managers for some facilities are considering optional standalone coverage from K&K in conjunction with property or general liability policies.
“We’re seeing it included along with the individual facility quote in some of the larger cities,” she said. “Many smaller venues or those in the Midwest still aren’t purchasing it.”
Meanwhile, some of the more traditional risks associated with sports and entertainment venues are becoming more costly thanks to increased litigiousness across the country.
Among other coverages, K&K provides general liability, liquor liability, property, crime, tenant user liability and boiler and machinery – all of which can be more expensive in states where litigation is more active, such as New Jersey, New York, Florida and California.
“Unfortunately, the litigious climate in some states has pushed up rates,” said Mello. “If someone slips and falls, for example, they may find an attorney to take the facility to court. The facility may not be found liable, but money is still paid out in that investigation and premiums do go up.”
Between greater security concerns and increasing litigation, insurance agents working with these accounts will likely benefit from a partnership with an experienced wholesaler. Sports and entertainment venues already carry a number of unique exposures, and underwriters with specific knowledge can be a huge help in plugging potential coverage gaps and reducing an agent’s own E&O.
“In our world, we always need to contemplate a variety of different risks – there can be fireworks at any one of these facilities, someone jumping from a bungee cord or parachuting into the venue, bodysurfing, hockey games where the crowd gets too rambunctious – but our underwriters are comfortable and experienced in the risks facilities face and providing them with accurately priced coverage,” said Mello.