EVENT INSURANCEEVENT INSURANCE

By Ian StackBy Ian Stack

Action Entertainment InsuranceAction Entertainment Insurance(a Division of Action Insurance Brokers)(a Division of Action Insurance Brokers)

TOPICSTOPICS

• Types of Insurances Available to Event OrganisersTypes of Insurances Available to Event Organisers

• The Importance of Risk ManagementThe Importance of Risk Management

• Public Liability - Why is my premium so expensive?Public Liability - Why is my premium so expensive?

• Tort ReformTort Reform

• Indemnity Agreements - Be Careful What you SignIndemnity Agreements - Be Careful What you Sign

• Benefits of Using an Insurance BrokerBenefits of Using an Insurance Broker

Types of InsuranceTypes of Insurance

• Public/Products LiabilityPublic/Products Liability

• Professional IndemnityProfessional Indemnity

• Cancellation & AbandonmentCancellation & Abandonment

• Workers CompensationWorkers Compensation

• Equipment InsuranceEquipment Insurance

Public/Products LiabilityPublic/Products Liability

SUMMARY OF COVER:SUMMARY OF COVER:

To indemnify the Insured (Event Organiser) for their legal To indemnify the Insured (Event Organiser) for their legal liabilityliability

to compensate third parties (injured person/s) for personal to compensate third parties (injured person/s) for personal injury injury

or damage to their property, where such personal injury or or damage to their property, where such personal injury or

property damage arises from the Insured’s negligent property damage arises from the Insured’s negligent

actions.actions.

Principal Exclusions Principal Exclusions (summary)(summary)CLAIMS ARISING FROM:CLAIMS ARISING FROM:

• INJURY TO EMPLOYEES (WORKERS COMPENSATION)INJURY TO EMPLOYEES (WORKERS COMPENSATION)

• USE OF REGISTERED MOTOR VEHICLESUSE OF REGISTERED MOTOR VEHICLES

• USE OF WATERCRAFT (LENGTH LIMITS APPLY)USE OF WATERCRAFT (LENGTH LIMITS APPLY)

• USE OF AIRCRAFTUSE OF AIRCRAFT

• PROFESSIONAL NEGLIGENCE PROFESSIONAL NEGLIGENCE

• CONTRACTUAL LIABILITYCONTRACTUAL LIABILITY.

CommonCommon Misconceptions Misconceptions

THE VENUE HAS THEIR OWN LIABILITY INSURANCETHE VENUE HAS THEIR OWN LIABILITY INSURANCE

THEREFORE I DON’T NEED TO TAKE OUT COVER.THEREFORE I DON’T NEED TO TAKE OUT COVER.

MY POLICY COVERS MY CONTRACTORS.MY POLICY COVERS MY CONTRACTORS.

I DON’T NEED COVER AS THE COMPANY THAT HAS I DON’T NEED COVER AS THE COMPANY THAT HAS

CONTRACTED ME TO ORGANISE THE EVENT HAS CONTRACTED ME TO ORGANISE THE EVENT HAS TAKEN TAKEN

OUT INSURANCE ON THE EVENT.OUT INSURANCE ON THE EVENT.

PROFESSIONAL INDEMNITYPROFESSIONAL INDEMNITY

SUMMARY OF COVERSUMMARY OF COVER

CIVIL LIABILITY CLAIMS ARISING FROM THE CONDUCT OF CIVIL LIABILITY CLAIMS ARISING FROM THE CONDUCT OF

INSURED’S PROFESSIONAL BUSINESS PRACTICE.INSURED’S PROFESSIONAL BUSINESS PRACTICE.

• BREACH OF PROFESSIONAL DUTYBREACH OF PROFESSIONAL DUTY

• DEFAMATIONDEFAMATION

• LOSS OF DOCUMENTSLOSS OF DOCUMENTS

• DISHONEST OR FRAUDULANT ACTS OF AN EMPLOYEEDISHONEST OR FRAUDULANT ACTS OF AN EMPLOYEE

• UNINTENTIONAL INFRINGEMENT OF COPYRIGHT LAWSUNINTENTIONAL INFRINGEMENT OF COPYRIGHT LAWS

• SOME BREACHS OF THE TRADE PRACTISE ACTSOME BREACHS OF THE TRADE PRACTISE ACT

Principal Exclusion (Summary)Principal Exclusion (Summary)

• PUBLIC/PRODUCTS LIABILITY CLAIMSPUBLIC/PRODUCTS LIABILITY CLAIMS

• CRIMINAL ACTS BY THE INSUREDCRIMINAL ACTS BY THE INSURED

• OVER-RUNNING OF BUDGETOVER-RUNNING OF BUDGET

• PERSONAL INJURY OR PROPERTY DAMAGE CLAIMSPERSONAL INJURY OR PROPERTY DAMAGE CLAIMS

Cancellation/Abandonment Cancellation/Abandonment

SUMMARY OF COVERSUMMARY OF COVER

CANCELLATION, ABANDONMENT, POSTPONEMENT OR CANCELLATION, ABANDONMENT, POSTPONEMENT OR

INTERRUPTION OF EVENT CAUSED BY AN INSURED PERIL:INTERRUPTION OF EVENT CAUSED BY AN INSURED PERIL:

• DAMAGE TO VENUEDAMAGE TO VENUE

• DELAY IN TRANSPORT (vehicle breakdown, airline DELAY IN TRANSPORT (vehicle breakdown, airline strike etc)strike etc)

• ADVERSE WEATHER CONDITIONS (outdoor events)ADVERSE WEATHER CONDITIONS (outdoor events)

• NON-APPEARANCE OF PERFORMER / GUEST SPEAKERNON-APPEARANCE OF PERFORMER / GUEST SPEAKER

Principal Exclusions Principal Exclusions (Summary)(Summary)

• SHORT FALL IN ATTENDANCESHORT FALL IN ATTENDANCE

• CANCELLATION DUE TO CONTRACTUAL PROBLEMSCANCELLATION DUE TO CONTRACTUAL PROBLEMS

• TERRORISMTERRORISM

Workers CompensationWorkers Compensation• COMPULSORY INSURANCE FOR ALL EMPLOYERS.COMPULSORY INSURANCE FOR ALL EMPLOYERS.

• MAY NEED TO TAKE OUT WORKERS COMPENSATION MAY NEED TO TAKE OUT WORKERS COMPENSATION FOR SOME CONTRACTORS AND SUB-CONTRACTORS.FOR SOME CONTRACTORS AND SUB-CONTRACTORS.

• POLICIES MAY BE REQUIRED IN EACH STATE OF POLICIES MAY BE REQUIRED IN EACH STATE OF AUSTRALIA.AUSTRALIA.

Equipment InsuranceEquipment Insurance

COVERS LOSS OR DAMAGE INCLUDING THEFT, FIRE, COVERS LOSS OR DAMAGE INCLUDING THEFT, FIRE,

WEATHER PERILS, MALICIOUS DAMAGE AND WEATHER PERILS, MALICIOUS DAMAGE AND TRANSITTRANSIT

DAMAGE.DAMAGE.

RECOMMENDED IF YOU ARE HIRING OR RECOMMENDED IF YOU ARE HIRING OR BORROWING BORROWING

EQUIPMENT FOR YOUR EVENT.EQUIPMENT FOR YOUR EVENT.

RISK MANAGEMENTRISK MANAGEMENT

RISK is the chance of something happening that will have RISK is the chance of something happening that will have anan

adverse effect on the organisation or individual.adverse effect on the organisation or individual.

RISK MANAGEMENT is the process of planning, organising,RISK MANAGEMENT is the process of planning, organising,

leading and controlling the activities of an organisation in leading and controlling the activities of an organisation in orderorder

to minimize the adverse effects of accidental losses on thatto minimize the adverse effects of accidental losses on that

organisation at reasonable cost.organisation at reasonable cost.

Five Basic Risk Management Five Basic Risk Management StepsSteps

RISK INDENTIFICATIONRISK INDENTIFICATION

RISK QUANTIFICATIONRISK QUANTIFICATION

RISK AVOIDANCERISK AVOIDANCE

RISK CONTROLRISK CONTROL

RISK FINANCINGRISK FINANCING

Risk IdentificationRisk Identification• NEED TO ESTABLISH THE SERIOUSNESS OF THE PROBLEM.NEED TO ESTABLISH THE SERIOUSNESS OF THE PROBLEM.

• NEED TO ESTABLISH THE EFFECT THESE RISKS COULD HAVE NEED TO ESTABLISH THE EFFECT THESE RISKS COULD HAVE ON THE ORGANISATION.ON THE ORGANISATION.

• PROCESS INVOLVES:PROCESS INVOLVES:

- Interviewing management- Interviewing management

- Inspecting sites- Inspecting sites

- Analysing flow charts- Analysing flow charts

- Reviewing past claims history- Reviewing past claims history

Risk QuantificationRisk Quantification

MEASURING THE EXTENT OF THE PROBLEMS THAT MEASURING THE EXTENT OF THE PROBLEMS THAT COULD RESULT FROM A RISK HAPPENING.COULD RESULT FROM A RISK HAPPENING.

MEASURING LOSS FREQUENCIES AND LOSS MEASURING LOSS FREQUENCIES AND LOSS SEVERITY.SEVERITY.

METHODS INCLUDE:METHODS INCLUDE:

- Statistical analysis- Statistical analysis

- Review of layout of event site- Review of layout of event site

Risk AvoidanceRisk Avoidance

• DECIDE NOT TO PROCEED WITH THE EVENT TO DECIDE NOT TO PROCEED WITH THE EVENT TO ENSURE THE RISK WILL NOT OCCUR.ENSURE THE RISK WILL NOT OCCUR.

• ELIMINATE THE HAZARD CAUSING THE RISK.ELIMINATE THE HAZARD CAUSING THE RISK.

• CONTRACT THE RESPONSIBILITIES OF THE RISK TO CONTRACT THE RESPONSIBILITIES OF THE RISK TO OTHERS.OTHERS.

Risk ControlRisk Control

IMPLEMENT PHYSICAL RISK CONTROL MEASURES:IMPLEMENT PHYSICAL RISK CONTROL MEASURES:

- Better fire protection- Better fire protection

- More security guards- More security guards

Risk FinancingRisk Financing

INSURANCEINSURANCE

PUBLIC LIABILITY - Why is my PUBLIC LIABILITY - Why is my Premium so ExpensivePremium so Expensive

MAJOR PRESSURES ON LIABILITY INSURANCE:MAJOR PRESSURES ON LIABILITY INSURANCE:

• ATTITUDE OF SOCIETY - If something happens, someone ATTITUDE OF SOCIETY - If something happens, someone pays.pays.

• CHANGES TO REGULATIONS COVERING LAWYERS - No CHANGES TO REGULATIONS COVERING LAWYERS - No Win, No Pay.Win, No Pay.

• COURTS & LEGISLATION - Joint & Several Liability.COURTS & LEGISLATION - Joint & Several Liability.

• INCREASING NUMBER OF CLAIMS & CLAIMS COSTS - INCREASING NUMBER OF CLAIMS & CLAIMS COSTS - Between 1998 - 2000 public liability claims increased Between 1998 - 2000 public liability claims increased from 55,000 to 88,000 - a 60% jump. Created a shortfall from 55,000 to 88,000 - a 60% jump. Created a shortfall of $960 million.of $960 million.

(Cont.)(Cont.)• LIABILITY INSURANCE IS ‘LONG TAIL BUSINESS’ - In LIABILITY INSURANCE IS ‘LONG TAIL BUSINESS’ - In

1994 the combined insurers loss ratio was 42% and in 1994 the combined insurers loss ratio was 42% and in six years this increased to 121%.six years this increased to 121%.

• PROLIFERATION OF HIGHER RISK RECREATIONAL PROLIFERATION OF HIGHER RISK RECREATIONAL ACTIVITIES - often undertaken by people who do not ACTIVITIES - often undertaken by people who do not have the appropriate level of fitness for that activity.have the appropriate level of fitness for that activity.

• COLLAPSE OF HIH INSURANCE - had a large share of COLLAPSE OF HIH INSURANCE - had a large share of the liability market, reduced the financial capacity of the liability market, reduced the financial capacity of the insurance industry to provide liability insurance.the insurance industry to provide liability insurance.

• TERRORIST ATTACT - SEPT 11 - the biggest insurance TERRORIST ATTACT - SEPT 11 - the biggest insurance payout in history. Increased insurance costs across payout in history. Increased insurance costs across the global market. Reduction in capital and increased the global market. Reduction in capital and increased premiums.premiums.

(Cont.)(Cont.)

• INSURANCE TAXES - stamp duty, GST, Fire Service Levy.INSURANCE TAXES - stamp duty, GST, Fire Service Levy.

• REDUCED INVESTMENT INCOME - Insurers are loosing REDUCED INVESTMENT INCOME - Insurers are loosing money on their non-insurance investments and looking money on their non-insurance investments and looking to their core business activities (insurance premiums) to their core business activities (insurance premiums) to raise revenue.to raise revenue.

• LACK OF COMPETITION IN THE AUSTRALIAN MARKET - LACK OF COMPETITION IN THE AUSTRALIAN MARKET - mergers of major insurers, withdrawal of international mergers of major insurers, withdrawal of international insurers from the Australian market, Australian Insurers insurers from the Australian market, Australian Insurers withdrawing from writing certain classes of insurance.withdrawing from writing certain classes of insurance.

TORT REFORMTORT REFORM

NEW SOUTH WALES - Civil Liability Act 2002NEW SOUTH WALES - Civil Liability Act 2002

• Maximum amount of damages that may be awarded for Maximum amount of damages that may be awarded for non-economic loss is $350,000.non-economic loss is $350,000.

• Maximum costs that may be recovered for legal services Maximum costs that may be recovered for legal services on personal injury claims up to $100,000 are to be on personal injury claims up to $100,000 are to be capped:capped:

- a plaintiff - fixed at the greater of 20% of the amount - a plaintiff - fixed at the greater of 20% of the amount received or $10,000received or $10,000

- a defendant - fixed at the greater of 20% of the - a defendant - fixed at the greater of 20% of the amount sought by the plaintiff or $10,000amount sought by the plaintiff or $10,000

(cont).(cont).• Solicitors and Barristers are prohibited from providing legal Solicitors and Barristers are prohibited from providing legal

services on a claim for damages unless they reasonably services on a claim for damages unless they reasonably believe that the claim has reasonable prospect of success.believe that the claim has reasonable prospect of success.

• A person does not owe an injured person a duty of care to A person does not owe an injured person a duty of care to warn of risks that a reasonable person would consider warn of risks that a reasonable person would consider obvious.obvious.

• WaiversWaivers

• Intoxication - A court may only award damages to an Intoxication - A court may only award damages to an intoxicated person for death, injury or property damage if intoxicated person for death, injury or property damage if the death, injury or property damage would have occurred the death, injury or property damage would have occurred if the person was not intoxicated. The intoxicated person is if the person was not intoxicated. The intoxicated person is presumed to have been contributorily negligent to a presumed to have been contributorily negligent to a degree of 25% or greater.degree of 25% or greater.

(cont).(cont).

• Good SamaritanGood Samaritan

• VolunteersVolunteers

• ApologiesApologies

• Structure settlementsStructure settlements

• Limitation periodsLimitation periods

INDEMNITY AGREEMENTSINDEMNITY AGREEMENTS

• OTHERWISE KNOWN AS ‘HOLD HARMLESS’ CLAUSES OR OTHERWISE KNOWN AS ‘HOLD HARMLESS’ CLAUSES OR CONTRACTUAL LIABILITY.CONTRACTUAL LIABILITY.

• DEFINITION - WHERE ONE PARTY ASSUMES THE LEGAL DEFINITION - WHERE ONE PARTY ASSUMES THE LEGAL LIABILITY OF ANOTHER PARTY UNDER THE TERMS OF A LIABILITY OF ANOTHER PARTY UNDER THE TERMS OF A CONTRACT (CONTRACTUAL LIABILITY).CONTRACT (CONTRACTUAL LIABILITY).

• COMMONLY FOUND IN VENUE HIRE CONTRACTS, COMMONLY FOUND IN VENUE HIRE CONTRACTS, AGREEMENTS WITH COUNCILS OR GOVERNMENT AGREEMENTS WITH COUNCILS OR GOVERNMENT INSTITUTIONS, EQUIPMENT HIRE AGREEMENTS.INSTITUTIONS, EQUIPMENT HIRE AGREEMENTS.

Indemnity Agreements & Their Indemnity Agreements & Their Effect of Public Liability Effect of Public Liability InsuranceInsurance

• CLAIMS ARISING FROM LIABILITY ASSUMED UNDER CLAIMS ARISING FROM LIABILITY ASSUMED UNDER CONTRACT ARE EXCLUDED UNDER PUBLIC/PRODUCTS CONTRACT ARE EXCLUDED UNDER PUBLIC/PRODUCTS LIABILITY INSURANCE POLICIES.LIABILITY INSURANCE POLICIES.

• POLICIES CAN SOMETIMES BE ENDORSED TO NOTE POLICIES CAN SOMETIMES BE ENDORSED TO NOTE SPECIFIC INDEMNITY AGREEMENTS, SUBJECT TO SPECIFIC INDEMNITY AGREEMENTS, SUBJECT TO INSURER’S APPROVAL.INSURER’S APPROVAL.

• LIABILITY CRISIS HAS MADE INDEMNITY AGREEMENTS LIABILITY CRISIS HAS MADE INDEMNITY AGREEMENTS ALMOST IMPOSSIBLE TO INSURE FOR - INSURERS ALMOST IMPOSSIBLE TO INSURE FOR - INSURERS DON’T LIKE COVERING OTHER PARTY’S NEGLIGENCE.DON’T LIKE COVERING OTHER PARTY’S NEGLIGENCE.

Indemnity Agreements - Indemnity Agreements - SolutionSolution

• AVOID SIGNING THEM !AVOID SIGNING THEM !

• IF UNABLE TO AVOID THEM, TALK TO YOUR IF UNABLE TO AVOID THEM, TALK TO YOUR INSURANCE BROKER ABOUT HAVING THEM NOTED ON INSURANCE BROKER ABOUT HAVING THEM NOTED ON YOUR POLICY.YOUR POLICY.

• CONSIDER ‘INTERESTED PARTY’ ALTERNATIVECONSIDER ‘INTERESTED PARTY’ ALTERNATIVE

WHY USE AN INSURANCE WHY USE AN INSURANCE BROKERBROKER

• ACTS AS AN AGENT FOR THE INSURED, NOT FOR THE ACTS AS AN AGENT FOR THE INSURED, NOT FOR THE INSURER.INSURER.

• NOW SUBJECT TO THE NEW FINANCIAL SERVICES NOW SUBJECT TO THE NEW FINANCIAL SERVICES ACTS - strong focus on consumer protection.ACTS - strong focus on consumer protection.

• NOT ONLY ORGANISES INSURANCE BUT ADVISES YOU NOT ONLY ORGANISES INSURANCE BUT ADVISES YOU ON HOW TO MANAGE ALL OF YOUR RISKS, REDUCE ON HOW TO MANAGE ALL OF YOUR RISKS, REDUCE EXPOSURES IN ORDER TO KEEP INSURANCE COSTS EXPOSURES IN ORDER TO KEEP INSURANCE COSTS DOWN.DOWN.

• SPECIALIST BROKERS FOR NICHE INDUSTRIESSPECIALIST BROKERS FOR NICHE INDUSTRIES