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Take1 Insurance has introduced terrorism insurance for venues. The Laguna Hills, Calif. company has created a customized $1 million insurance policy that it hopes will meet the modern day needs of the live music and special events industry.
Called ‘Combined Crisis Cover,' the policy is geared toward venues, festivals, event services firms like equipment rental, audio/visual production and installation companies, event planners, promoters and touring entertainers.
Affordably priced, the policy will offer protection and immediate coverage in the event of, or threat of, malicious acts including terrorism or any act that disrupts normal business operations caused by a live assailant who interrupts or cancels a live event or any other act deemed malicious.
Unlike the standard, and many think ineffective, Terrorism Risk Insurance Program Reauthorization Act coverage (TRIPRA) that is currently offered on every commercial insurance policy, the new Take1 Combined Crisis Cover policy is not specific to the commission of a terrorist act as determined on a case-by-case basis by the Secretary of the Treasury. Such acts have been difficult to claim against because of the high minimum damage threshold required for the policy to kick in.
In fact, since 9/11, no event including the Boston Marathon bombings and the Pulse nightclub shootings in Orlando, has been certified by the Secretary of the Treasury as terrorism or met the minimum damage condition.
“TRIPRA is designed to protect against extraordinary loss after a minimum of $5 million in aggregate loss is achieved,” said Take 1 Insurance Executive Vice President and Program Director Scott Carroll. “We believe that our insured and their agents need an insurance program that kicks in immediately whenever a malicious act or threat is committed. This new multiperil policy provides them with an affordable way to recoup some of their business interruption, property damage, and certain liability losses.”
Carroll came up with the idea when he was on a trip to the U.K. “I was in London attending the International Live Music Conference, and there was a panel talking about the Paris nightclub disaster that had occurred earlier in the year,” said Carroll. “On the panel there were a couple of promoters who brought the Eagles of Death Metal act to the Bataclan concert hall; as well as the Chief of Police of the London Cabinet Office Briefing Room A (COBRA) unit, which is the police force that responds to special acts. The Chief was asked if he thought the Bataclan massacre was a specific target of terrorism or just an easy soft target. The Chief said he thought it was a soft target attack. After the conference, I started bringing up the issue with clients in the music industry who all disagreed and thought live music venues were suddenly at the forefront of the terrorist's agenda. That got me to thinking ‘what does the insurance world think about this?.'”
Carroll took the lead and met with senior underwriters at insurance industry heavyweight Lloyd’s of London. “I asked, ‘do you believe that music and entertainment venues are soft targets?’ and the answer was ‘no.' Lloyd's is used to writing $500-million underwriting decisions that provide terrorism coverage for places where political issues are significant and terrorism claims could mean multimillion dollar payouts.” Lloyd’s underwriters agreed that the music industry and live event venues were now targets of hard terrorism.
“That got me thinking about TRIPRA,” said Carroll. “In the U.S., it’s the only insurance answer to terrorism and, since 9/11, has never paid out. It’s inexpensive, but it’s got a high barrier to claim.” Carroll again reached out to his colleagues at Lloyd’s and together they came up with the Combined Crisis Cover policy. “We are a cover holder of Lloyd’s and they grant us the authority to rate, book and issue the policy which binds them to the coverage.”
“The great thing about this policy is that while it includes terrorism, the event does not need to be designated as terrorism,” he said. “Any act that is committed or threatened in a way that forces the interruption or cancellation of an event is covered. Any act that causes property damage or creates certain liabilities at a planned event is covered.”
At the moment, Take1 Insurance is the sole authorized agent that Lloyd’s has granted the rights to sell the product. Take1 started selling the new insurance last week.
There are four areas of coverage: Active assailant; threat of malicious act; terrorism responding to property damage and business interruption loss and terrorism and active assailant liability. “Terrorism has typically been a property cover,” explained Carroll. “What we’re doing with the new offering is including liability.”
Carroll also pointed out that the threshold to meet coverage criteria is triggered more easily and has a far lower bar than TRIPRA offers. “All that is necessary for coverage to be met is for any municipal authority to state that they believe a terrorist act has occurred.”
A typical Combined Crisis Cover policy will cost $745 a year and offers $100,000 of coverage. “It’s not based on any specific number of events,” said Carroll. “It’s what I would recommend to smaller venues like nightclubs. Bigger venues can take out a $1 million dollar policy for around $3,000. Venues that want even larger coverage amounts will be examined on a case-by-case basis.
“We expect this to work for any sized venue,” said Carroll. “From the smallest of the small to festivals and large arenas.”
“The price of the coverage is extremely low for venues that have hundreds of people a week coming through their doors,” he said. “This policy is not limited to venues. It’s for all sorts of customers that deal in the entertainment world. Event services firms, event planners, equipment rental companies, anyone who has a belief that they are exposed.”
“I absolutely love the idea,” said Brian Daughrity, partner at Anderson Benson Insurance, Nashville. “I’m going to try to add this to most policies we have. I think it’s amazing. TRIPRA is not effective. This policy is client specific; it’s not tied to the government and you can get up to $1 million. The coverage is not reliant on the TRIPRA act and I think the prices are reasonable.”
“This is going to be a real policy,” said Daughrity. “The issue with TRIPRA is that collecting on a TRIPRA policy is a nightmare. This answers that problem. There’s no underwriting. All you need is to classify under the entertainment umbrella.”
Paul Lopez, Snapp Insurance, San Diego, agrees. “This is something that has been needed,” he said. “Especially with the only coverage offered now being TRIPRA. I’m going to start recommending it immediately. There is an exposure for venues. I think it will be a great tool for venues, festivals, concerts; anything that has a high publicity component.”
Lopez expects the product to move out of the entertainment-specific world rapidly. “As people become familiar with the product, I see it being taken up by retail spaces and any high capacity venue.”
Coverage on the new policy will commence immediately after signing. “Once the payment is made, a lump payment for the year or a month on a monthly plan, the policy takes hold,” said Lopez.
“It’s all about risk management,” he said. “I’ve already spoken to a handful of my clients and they are definitely expressing interest. I expect this to be part of the standard entertainment world insurance basket from here on out.”
Interviewed for this story: Scott Carroll, (714) 285-4090; Brian Daughrity, (615) 630-7802, Paul Lopez, (619) 908-6340