Rethinking Event Cancellation Insurance

Event Protect is offering primary, secondary ticket agents, venues and sports teams a new way of making sure their customers are refunded all of their money directly if an event is canceled. 

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The past years have seen an increasing number of live event cancellations due to terrorism, bad weather conditions, financial failure, illness of the artist, national mourning and other reasons.

Traditionally in such cases, event cancellation left the ticket agent at the back of the queue for compensation. The promoter had to wait for their insurance company to appoint adjusters, validate and agree their claim, transfer the claim settlement money, then forward money to the ticket agent in order to allow the ticket agent to refund its customers. This is on the assumption that the promoter actually has event cancellation insurance.

Customers aren’t dealing with the promoter but the ticket agent. So when it comes to customer relationships and refunds in case an event does not go ahead, it is the ticket agent’s relationship with customer that is in danger. Event Protect wants to honor this fact by moving the insurance from the promoter to ticket agents.

Ben Lenighan, Event Protect’s business development manager, explains;

“Let’s say there’s an event cancellation. Immediately we work directly with our affected ticket agent members from day one posting social media notices and sending emails directly from the ticket agent to their customers inviting them to fill in a simple claim form to register their refund request.

“On validation and acceptance of their claim by our insurers, through their claims’ handling partners, they directly refund the money to the customer’s nominated bank account. If our member has chosen to partner with the payment processor, the customers’ payment card can be re-credited directly.

“This takes away the burden from the ticket agents, removing their reliance on the promoter making refunds available and enables the refunded money to be deposited straight to their customer’s account within a couple of weeks. Under traditional circumstances it could take much longer to get the money to the customer.”

Event Protect says its programme provides a way to save time and money that traditionally has been committed by a promoter taking out this type of insurance.

According to Lenighan, “This promoter insurance would require a back-and-forth assessment and discussion with insurers, plus providing a lot of documentation and disclosure about the event and the organiser’s track record, how many tickets are to be sold, the liabilities they have, which artists are going to be performing, etc, etc.”

The Event Protect membership scheme allows the Ticket agent to sync their sales data, through an API onto the company’s “Protect Platform.” By the process of becoming a member and the real-time data being available, insurers are able to underwrite a risk without the back and forth communication associated with assessing the promotional risk.

Event Protect works with various “A-rated” insurers worldwide, who can access this sales data via the Protect Platform and look at real-time information such as volume of tickets sold, geographical location of the event and the event types.

“A lengthy risk assessment isn’t necessary. The underwriters have access to all the information they need with just the simple API through to our Protect Platform.” Lenighan explained.

“Another benefit: traditional insurance through a promoter requires a lump sum premium to be paid in advance, for event coverage. The Event Protect Scheme does not. The member is charged per transaction. This is more accurate and better for the ticket agent’s cash flow. With every single transaction that comes to us, it is insured individually.”

Lenighan thinks this way of insuring ticket sales gives ticket agents a further opportunity to “create a new revenue stream by passing the cost of their membership of Event Protect onto the ticket holder or the event organizer adding a small markup to the ticket price for the support and added security that the Event Protect membership delivers.”

“As a ticket agent, your Event Protect membership is providing additional levels of support and financial protection. It’s understandable to your customer if you charge a miniscule percentage onto the transaction value for the added security and support you extend to your customers.”

In many ways, a ticket agent’s membership of Event Protect offers customer protection benefits similar to the protection offered by travel companies’ memberships of ABTA or ATOL.

Event Protect has partnered exclusively with Lloyd’s of London Underwriters and Allianz Global Corporate & Specialty (AGCS).

Peter Williams, the global product leader, live entertainment at Allianz Global Corporate & Specialty commented: “In today’s events market, the risk of cancellation is higher than ever, so it’s important that insurance solutions like Event Protect exist. It provides greater confidence for not only ticket agents but insurers, offering through its platform data-driven insight to identify risk exposure more effectively.”

The Event Protect policy protects ticket agents from the cost of meeting their customer refund obligations in situations of cancellation and rescheduling due to a variety of scenarios such as adverse weather conditions, transport delays, key supply or mechanical failure.

According to Lenighan, “It’s what’s called an exclusion-based policy, meaning if a situation is not excluded it’s covered. Apart from its stated exclusions, in general terms the policy covers everything that’s beyond the ticket agent’s control.”

While terrorism isn’t covered by Event Protect’s policy at the moment, it can be bought by members as an extension.

“Because we’re working with numerous insurers and events globally, we can spread the risk exposure. So, we actually get really good rates for things like terrorism and political risk in general,” Lenighan said.

The company is in the midst of launching a new top-tier event cancellation scheme, which will be for only the most established ticket agents. Lenighan said it is to be the “broadest event cancellation scheme on the market, protecting Members against additional scenarios like financial failure of the event organizer, non-appearance of a key person and National Mourning.”

In other words: it protects against most of the things that are usually excluded from event promoter insurance policies. The protection against financial failure of the event promoter in particular should be of interest to ticket agents.

“Very few insurance schemes cover these risks, so we actually had to work really hard with the insurance providers to give them a comfort level that membership of the Event Protect scheme would be an endorsement of the credibility of both the ticket agent and the events they work with,” Lenighan said, adding that “the main goal of our product is providing confidence of security in what is sometimes viewed as a high-risk market.”