The emergence and spread of the novel coronavirus has led to the cancellation of countless events and conferences around the world. In the past several days alone, several major conferences, including the massive SXSW conference in Austin, Texas, have been called off over concerns about the outbreak.
Event organizers frequently purchase insurance to cover the financial risk of an unexpected cancellation of their event or a reduction in attendance. Event cancellation insurance is typically designed to reimburse the event organizer’s lost profits and to pay for refunds the organizer must make to attendees or sponsors if an event is cancelled, postponed or relocated for reasons covered by the policy.
The unprecedented impact of coronavirus on conferences and events worldwide is sure to place enormous strain on the insurance carriers that underwrite event cancellation insurance. Faced with the wave of cancelled events and conferences, those insurers will have strong incentives to review all claims with heightened scrutiny and to require strict compliance with seemingly minor policy conditions.
Event organizers who have bought cancellation policies should know that they may be facing an uphill battle in trying to obtain coverage from insurers who are overwhelmed by the sheer volume of cancellation claims and who are trying to limit their own losses. It is critical for policyholders to understand the terms of their policies and to comply with all of the requirements that the policy places on them, including providing timely notice of a potential cancellation.