Sound Underwriting Required To Make Wide Range Of Event Risks Worthwhile

o Where is the venue?

o What's the exposure to the public?

To demonstrate the extremes special event insurers must sometimes deal with, Mr. Kasper said he is working on a risk that is a new concept being done in Europe.

"It's called Dinner in the Sky," he said. "There is a dining room platform that is dangled from the end of a crane. You can board on the ground and they lift you up in the air several hundred feet, and you have dinner in the sky."

"It's something we've never seen before, and from what we've been told, has not been done before," he added. (To see the concept in action, check out the accompanying images, or go to www.dinnerinthesky.com.)

"Something like that…takes a fair amount of explanation in terms of what the process is, what the equipment is, and really some basic engineering data and trying to develop what the parameters of its use are," he explained. "For instance, at what wind speed do you not go up in the air with something like that?"

Addressing more down to Earth risks, insurers generally consider events such as a family reunion or wedding as "benign," Mr. Kasper said.

"The big issue there becomes liquor liability and what's the exposure around that," he noted, adding that for other events, carriers will use waivers and warranties to limit exposure and mitigate claims activity.

For most events, Mr. Kasper said he can get quotes quickly. "Generally, if it is a standard event like a concert or a beer festival, or something along those lines, we can turn those around within 24 hours."

Unique events can take a little longer, Mr. Kasper said. "Not a great deal of time, but maybe several days, perhaps, to get done."

Eric Taylor, vice president of underwriting for Richmond, Va.-based James River Insurance Company, said his carrier considers the following when underwriting a special event risk:

o The activity

o The controls that are in place

o The types of people attracted to a given event

o The hours of operation

o Whether or not alcohol is served

Knowing who is responsible for what with respect to the event is also important, he said–noting, for example, that if staging and lighting have been set up, he will look into the subcontractors responsible for that.

"I think as underwriters we have to look at the contractual liability obligations for some of the major exposures," he said. "For instance, if you're doing an event, and you have some carnival rides coming in, as underwriters we have to see which way the arrow points on things like that."

With sound underwriting, companies can accurately determine what types of risks they want to write, and which ones they want to stay away from, experts say.

Speaking to the latter point, Mr. Kasper said he has seen carriers express concern over events centered on the equine business, such as rodeos, stampedes and cattle drives.

"You're dealing with horses, and they can be spooked for whatever reason," Mr. Kasper explained, noting that with such an unknown, some carriers are content to pass.

Promotional events, such as ones held by radio stations, can get a little risky as well from an insurer's standpoint, according to Bob Greenebaum, executive vice president and casualty practice group leader of wholesale brokerage Swett & Crawford.

"You'll see radio stations do promotional events where they might have a daredevil act, or an unusual kind of event where the greatest risk may be to not only the participant but to the spectators."

He cited the example of someone like the late Evel Knievel, jumping over cars on a motorcycle, noting that the host of the event is responsible not only for the daredevil but for the people watching. "So that is obviously a higher risk to undertake," said Mr. Greenebaum.

High-flying stunts, however, are not the only risk factor that can give a carrier pause. Mr. Taylor said that James River Insurance tends to avoid the small and very local events due to competitive reasons.

"The ones that we stay away from are the real small ones–the local blueberry festival–because there's just too much competition and it's just a very crowded market," he said, noting that he would be willing to write such an event depending on the level of competition.

Sometimes professionals in this market will see some unique events they want to insure but may take a little extra time to properly underwrite. For example, Mr. Greenebaum spoke about a radio promotion that a colleague of his wrote a few years ago.

"This family of acrobats did a high-wire act across the Chicago River," he explained. "That was an unusual one for sure."

Describing the underwriting process that must have taken place, Mr. Greenebaum said that "if you were going to put yourself in the insurer's shoes to do that, you'd want to make sure that safety issues were all taken care of, of course. If one of the performers fell into the water, is there a rescue crew close by? Are the spectators kept at an appropriate distance? Are they able to swim?"

"They're fairly logical questions that get asked to understand the risk," he added.