Special Events Present Unique Security, Insurance Challenges

As the country enters a season of special events, U.S. Secretary of Homeland Security Tom Ridge has named a task force to focus on security for these major events.

Ridge announced the task force in remarks before the Radio & Television News Directors and Network Broadcasters last month.

Ridge cited the need to enhance security surrounding coming events including traditional July Fourth celebrations and the major political conventions planned for Boston and New York this summer.

“In this country, we soon enter a season that is rich with symbolic opportunities for the terrorists to try to shake our will. Americans will dedicate the World War II Memorial in Washington; host International Monetary Fund meetings in Washington, D.C. and the G-8 Summit in Georgia; celebrate Independence Day; travel to Athens for the Olympics; hold political conventions in Boston and New York; followed, of course, by our own elections, the traditional holidays and inaugural in 2005,” Ridge said.

“The terrorists are resolute, but we are more so. They plan and prepare — and so must we.”

Ridge said that special attention would be given to areas of concern such as rail and air security, hazardous materials shipments, chemical facilities, and protection of the electrical grid, among others. The Department of Homeland Security will lead a working group of federal agencies that will oversee this effort. He said this group would reach out to mayors, Governors and officials at every level of government, as well as the private sector.

In his remarks, however, Ridge also cautioned that at this point there has not been any “specific, credible threat information around any of these events,” and described the task force planning as “common sense.”

Olympics
As the next step in its strategy to manage the risks inherent to its core business – the Olympic Games – the International Olympic Committee (IOC) announced that it has taken out an insurance policy, which also protects the interests of the National Olympic Committees and the International Federations.

The first Games to be covered by this new policy will be the Games of the XXVIII Olympiad in Athens, this summer. The total coverage will reportedly be for an amount of $170 million. A similar approach will apply for the next editions of the Games, i.e. Turin 2006, Beijing 2008 and Vancouver 2010.

The idea to put in place a risk management policy was initiated by IOC President Jacques Rogge following his election in 2001, when he indicated that there was a need for the IOC to protect the funding of the Olympic Movement by building financial reserves and, when necessary, taking out insurance. First discussions on the matter were held in November 2002.

Commenting on the announcement, President Rogge said, “Taking out a policy to manage the risk associated with one’s core business is standard, prudent behavior for any modern organization. We are happy with the terms agreed which will support not only the IOC but also the National Olympic Committees and the International Federations.”

Blowing-up baseball
A combination of heat, pressure and explosives was used last February to blow to smithereens the baseball involved in a play that some Cubs fans say cost their beloved team a trip to its first World Series in 58 years. But before the ball was destroyed in a publicity stunt aired on live television, it was insured by Salt Lake City excess and surplus lines writer Prime Insurance Syndicate Inc.

Prime, whose other office is in Chicago, was contacted to underwrite the destruction of the infamous ball, which hapless Cubs fan Steve Bartman reached up to grab as it veered into foul territory in game six of last year’s National League Championship Series. Cubs’ left-fielder Moises Alou appeared to have a good chance to make the catch, but just as Alou squeezed his glove to make the play, Bartman reached out to try and snag a souvenir. Alou, the Cubs and seemingly the entire city, reacted with furor. The Marlins scored eight runs in the inning and went on to later beat the Yankees to win the World Series.

The Bartman ball was taken home by a Chicago lawyer, who auctioned it off last winter to the highest bidder, which turned out to be Grant DePorter, who bought it on behalf of Harry Caray’s Restaurant for $113,824. The restaurant staged the “blow-up” event to assuage some fans’ festering anger, as well as raise money for the Juvenile Diabetes Research Foundation.

The ball was destroyed without a mishap.

Prime boasts its expertise in addressing hard-to-place exposures such as recreational risks, sporting events, nursing homes and towing agencies. “We received a call 24 hours prior to the event from a large broker we’d marketed over a period of years,” Prime CEO Rick Lindsey told Insurance Journal. “We contacted the fire marshal, talked to the pyrotechnician involved and the coverage was bound.” Lindsey discussed some of the factors he examined in underwriting the policy. “When it comes to me it does raise your awareness,” Lindsey said. “You have to check it out, make sure there’s not some good reason [it wasn’t insured elsewhere] like the guy doesn’t know what he’s doing. His (the pyrotechnician’s) background is movies for the most part and he definitely had the skills and ability to do it. From an explosion standpoint, it was more precise and technical than it was loud and scary. I think it was somewhat anticlimactic from a risk standpoint. It was very controlled and precise.”

The pyrotechnician had tested the explosion on about a dozen different balls a day in his California lab. Holes were drilled in the bottom of the box to minimize any risk. “He knew exactly what he was doing,” Lindsey said. “The explosions weren’t loud or dangerous in any way.”

The fire marshal saw videotape of test runs he had done on other balls, making him one of only a select few who knew exactly how the ball would be destroyed before the national TV event. “He’d seen video of the actual tests they’d done to other balls,” Lindsey said. “When you can get visuals, even photographs with digital images, it makes it easier for people to feel better real quick. In a case like this, you can’t afford all the delays. I talked to fire marshal 24 hours before event.”

The permit set a mandatory 20-foot distance from the explosion and the audience. Lindsey said he asked why that was the case, and also asked about the decibel-level of the explosion, which once again was not very loud. The shutters from all the media cameras in the room probably made more noise than the explosion, Lindsey joked. “There was zero risk of injury, as far as decibels or sound,” he added. “The risk was about a one on scale of one to 10.”

Lindsey said that in spite of all the information he was provided, it is always difficult to underwrite a policy for an unprecedented event such as this. “Obviously after the first time you’ve seen it, you’re going to do it 10 more times,” he said. “You see it, and you get more comfortable with it each time. They had difficulty getting the coverage. Why does it end up on my doorstep at this late date? Fundamentally as an underwriter there’s that kind of unknown.”