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It’s been a challenging year for many businesses, especially those in the recreation, leisure and entertainment world. But while entertainment continues to struggle, things are picking up for the recreation market, according to Patrick Gavin, managing director of ALIVE RISK, a division of All Risks Ltd. Gavin took some time to answer a few questions about new, and old, risks affecting today’s recreation accounts.
IJ: Describe the general market conditions for entertainment and recreation.
Patrick Gavin: Some areas are starting to come back in some way, shape or form. On the amusement side, water parks, family entertainment centers, amusement parks, are starting to open up. Really the most negatively affected area has been entertainment, large music and touring — that is not happening. One interesting area: We have insured our first couple of drive-in concerts. So, those are starting to come back. But again, life as we knew it six months ago is not there.
IJ: Have you seen a lot of insurance market contraction given the circumstances?
Gavin: Yes, there definitely has been a decline in business, but even with that decline, we’re still seeing the business happening out there. One area is with camps, clinics, and youth sports, and depending on where they’re operating, they may be required to have sexual abuse coverage. There are also schools that have canned contracts saying they are required to have sexual abuse and molestation coverage. So that’s one area that’s challenging but also needed.
We’ve seen some of the big players out there previously offer $10 million in limits (on sexual abuse coverage) but are now lowering that to just $1 million or $2 million so you’re seeing a lot of sublimits. We will sublimit that coverage, too. That way camps still get coverage, but it doesn’t overextend one market with a really long-tail liability coverage for something that can be tough to underwrite. Unfortunately, this is an issue that just won’t go away. Also, for smaller camps and clinics where there may be financial restraints, we are seeing more creative ways to offer sublimits for sexual abuse and molestation coverage, say for a five-day camp.
While the pandemic may have brought a decline in some business, have there been any areas that are generating new opportunities as well?
Gavin: Yes, one thing I think the pandemic did for agents and insureds alike was to look at the coverages they had. So many people looked and said, “Wow, do I have coverage for something if something like this happens?” … Like active shooter: “Do I really need that coverage?” Well, no you don’t until something happens. With COVID, it’s been cancellation and contingency business insurance. It could be weather coverage. … People are going to take a deeper look at their policies and coverage because of what’s happened.
So, right now, there’s not a lot of options to buy cancellation coverage, for COVID as an example. But I think as markets get ahold of this, as a vaccine comes out and things start to settle down, I think people are going to look at their coverages like active shooter, communicable disease, things that they know could be a disruption and say, “Does it make sense to reassess and make sure we’re covered as much as we can be?”…
But right now, people are in a tough spot. It’s the old adage that “you can’t buy fire insurance while the building’s burning down.”
IJ: What, if any, lessons have been learned from the pandemic thus far?
Gavin: I know this probably just sounds like the most generic answer ever, but in insurance, you have to plan for the unexpected, and what could have been more unexpected than this?
With sports, sexual abuse coverages and prevention, as well as concussion coverages and prevention, are two of the most talked about issues in the business, and for good reason. There have been terrible losses and incidents in both of those areas that have tragically affected people’s lives. From an insurance perspective, we’re going to continue to talk about prevention of those two risks, which is a good thing on all fronts. But also, we can’t lose sight of the other things, the unexpected … because the unexpected is going to happen and we need to be prepared.