Businesses looking to buy cancellation insurance for events around the world will not be able to get cover for the new coronavirus outbreak, industry sources said, as insurers rush to exclude the epidemic from their policies.
The Shanghai Grand Prix and the Mobile World Congress in Barcelona are among sporting events and major conferences cancelled as a result of the virus, which has claimed over 1,300 lives, mainly in China.
Organisers of events which already have epidemic cover will be able to claim for cancellation due to the coronavirus, provided the event was due to take place in a country subject to travel bans or limits on public gatherings, industry sources say.
Many businesses do not buy the extra epidemic cover, but large events are more likely to have it, insurers say.
But for those planning music, sporting or trade events now, some of whom begin organising and buy the insurance up to two years in advance, there will be no protection.
“As things stand at the moment, you would struggle to get coronavirus cover for any event, until we know where we are with this virus,” said Rebecca Mitchell, contingency underwriter at Argo Global.
Even though not all organisers buy extra epidemic cover, losses to cancellation insurers are already likely to be more than $100 million, said Tim Thornhill, director, sales in entertainment and sport at Lloyd’s of London broker Tysers.
Other events cancelled include the Hong Kong Art Basel fair, which one underwriter said would prove costly for insurers due to the high value of the art.
Analysts at Jefferies estimate the insurance value of the Shanghai Grand Prix at $500 million, though brokers and underwriters told Reuters they expected losses to be lower.
The wording of insurance contracts is often nuanced, so it could be hard to say whether cover was available or not, said Edel Ryan, who is on the Special Risks team at broker Marsh JLT Specialty.
But “disinclination to travel” was never covered by insurance, she added, so delegates or exhibitors who pull out of conferences outside a directly affected region would not be insured.
Major insurers such as Zurich and Lloyd’s of London underwriter Hiscox have said they do not expect a significant financial impact from the virus so far.
But Argenta, which operates in the specialist Lloyd’s of London market, said in an online post this week that if large events including the Tokyo Olympics were cancelled, “undoubtedly a number of Lloyd’s syndicates would be impacted.”