Denise Hattingh, MD: KEU Underwriting Managers
COVER: The events and entertainment industry is one of the industries that’s probably been hit hardest, and you probably had to jump into action very, very quickly, because cash flows and all of that sort of stuff doesn’t wait. Please tell us a little about your experience when this went down. What was triggered on your side?
Denise: We were informed by our insureds in the week commencing 10 March 2020, and we started receiving phone calls to say that they knew that events had been cancelled internationally. We had already spoken to our reinsurers in Germany, so we already knew that events were going to be cancelled.
What we didn’t know at the time was how long it would affect South African insurance, and when it would be implemented. So, come 15 March 2020 when President Ramaphosa declared a state of disaster, we knew immediately that for the following three months, all events were going to be cancelled. On our point of underwriting, our policies specifically add on communicable diseases. So it was never a question between us and the insured whether a policy triggers; we all knew that it was going to be triggered. It was just a question of calculating the financial impact that it was going to have, and the time period in which it was going to happen.
We already pre-empted most of this. We appointed a loss adjuster, starting with the financial side of it, and we’re happy to start paying our first interim payments to insureds on 4 April. Easter was cancelled, and the events industry had those expenses with zero income from the events that were cancelled. So they sat with an immediate cash flow situation, having to pay their staff, venues, and their other contractual obligations. And, obviously, they wanted to remain in good standing with everyone involved in hosting an event, such as the technical crew, the artists, the subcontractors, and so forth.
We, therefore, acted immediately and made very quick turnaround times in terms of interim payments. We were able to assist our insureds in that way, with our claims total coming to about R90 million. It was quite a big amount for us. The first state of disaster was called for three months, after which it had to be extended on a monthly basis. Every time this happened we knew that, for some of our insureds, it was going to involve even more events being cancelled. The collaboration we have with our insureds, with their financial directors and CFOs has been absolutely remarkable. It really came together.
Event cancellation is underwritten very specifically and directly to the needs of the event organiser. We were fortunate in that it was that specific, that the trigger was that immediate, and that we could start working to solve problems. That meant our insureds could see the immediate benefit of having insurance, and us holding their hands throughout the process. We could also assist them in terms of contractual enquiries that they had for future events.
Centriq was with us 110% from the very first day. It was a fantastic collaboration of many people. We still feel for the insureds, because obviously communicable diseases are now a worldwide exclusion. Those insureds who had annual policies were fortunate in that their insurance was paid out. But our insureds are still not up and running. And we still don’t know when we will be able to host the big events, the stadium live exhibitions, and those type of events. Only time will tell.
Event cancellation is underwritten very specifically and directly to the needs of the event organiser.
The film industry recovered fairly quickly. We had a film cancellation as a result of COVID-19. One of the nominated key crew members contracted the virus. And, as a result, the film had to be closed, sanitised, and so forth. It was all the additional expenses incurred for the period while they couldn’t film. But, again, the cover was that specific, and it was immediately acted upon. Our production companies in South Africa are incredibly professional and know how to handle a situation. So, from their point of view, they’ve already been unable to film, and for them to have started and then to have to stop in the middle because of the pandemic, was more than just an inconvenience.
It was also not only about money paid from the claim. Our client had very specific deadlines in terms of their broadcasting agreements. So, our insured acted immediately. And, again, it’s a good story to tell at the end of the day. We could assist them immediately; we could act immediately. Filming ended in good time, without the insured being out of pocket. For the entire entertainment industry, COVID-19 was a horrible, horrible time to go through, whether they’re a film producer, event organiser, or any other party associated with that, our industry came to a halt on 15 March 2020.
We also tried to assist the people who didn’t have event cancellation cover, or the guys who didn’t have the correct film production cover. But it’s still a long road to recovery. They’re really all made of steel, and I take my hat off to the industry. And isn’t that why we’re here in any event? We sell insurance to be of service to our insured. This is our work, this is what we can do to our markets, for our markets, and that’s why insurance plays such a critical role to all industries, but the entertainment industry
COVER: One side is that you could show the value of the industry and increase the trust, not just for yourself, but even for the industry in general. The other side of it is that it will stand you in good stead in the future, not just because of the reputation but also because people will now realise the value of event insurance. Going forward, how do you see that?
Denise: I think, going forward with our type of insurance, it’s about continuing to be relevant in the market. Communicable diseases is going to be a complete exclusion and has been since March 2020, with new insureds taking up cover. For us, it’s about continuing to be relevant and making sure that we understand the challenges ahead with things like virtual events. What is the risk of the insured?
You’re no longer going to the Sandton Convention Centre, and you no longer have 2 000 people attending an event day, but you’re now live streaming. So, you will need to understand what that event is all about. Because, at the end of the day, it’s still the production that needs to be around people who need to participate and who are paying for their ticket, and understand where it can go wrong. Then provide cover that is suitable for that.
Yes, the industry is going to take some time to recover, and I don’t think all will end well. We know for a fact that not all our event organisers will be able to start up again. We have to be relevant and approachable, and I think we need to do good and show our worth. If there’s an issue in the matter, assist your insureds. The events industry is incredibly dynamic; it changes constantly. So, you need to be acting immediately. Understand what you do so that you can act to assist the insured. And that makes it incredibly dynamic. It makes it a fantastic insurance market to be in. Understand the risk and stay relevant.
COVER: On that note, what role have the brokers played in this process?
Denise: They play a critical role in holding the hand of the insured and leading them to the correct cover. Just understanding, from a broker point of view, the impact of an event cancellation, and what the client expects to receive. What does their sponsor expect to receive? Knowledgeable brokers are incredibly important. What we have found through our claims journey is that if you stop the communication gap, you can solve matters very quickly. But if the underwriting was done incorrectly, then the outcome would have been disastrous. So, the broker plays a critical role in understanding what the event is all about. Where is the risk, actually, and what does the insured expect? What is it that they want to get back in their pocket because the event didn’t happen? And if that is clarified, and it’s very clear to all parties, then the claim is a breeze. It then literally becomes an accounting issue, which is exactly what we had.