Sporting events, concerts and festivals are making a comeback after a long year and a half of social restrictions, and the sports and entertainment sector is playing catch up as the world of sports and entertainment reopens.
Several insurance and MGA units were forced to pull back on the number of underwriters and underwriting assistants on staff due to the coronavirus lockdowns. It was an unfortunate repercussion of the uncertainty in the market.
Michael McCarroll, senior vice president and head of sports and entertainment at The Plexus Groupe, told Insurance Business that if you had a team that before was operating with thin to decent margins, even a decently performing MGA that focuses on sports and entertainment became a poorly performing unit because they were no long writing the same volume of business.
“Unfortunately, we got to a place where the best underwriting entities and MGAs had to decide between burning money by keeping people on payroll when there’s no business coming in, or laying people off,” said McCarroll. “The majority chose the latter - but now we’re coming back with raging force, almost like an overcorrection.”
Promoters and event management teams want to jump back into business and build their brand awareness – and this places pressure on underwriting teams that are much smaller in size. McCarroll explained that now, within 60 days, these units are seeing the amount of business that is usually processed in a year.
“Right now, everyone is having a mad dash to get all their annual programs rewritten and all the teams they go to have a quarter or half of the people,” he added.
A key to getting a deal done successfully is giving your underwriter the best submission possible. Brokers were used to getting deals flipped quickly, but underwriters aren’t in the position to do that right now when they’re stretched thin – placing even more emphasis on the broker to get the submission right in the first place.
“It comes down to helping underwriters out, understanding the tough road ahead and empowering them with what they need,” McCarroll emphasized.
“We have been in a good position because while my unit’s focus was predominately sports and entertainment, Plexus’s wasn’t - we had larger parts of the organization to lean on,” said McCarroll. “Many smaller brokerages in the space had to sell and experience the struggles that go along with a transaction. Others that made it through, are currently rehiring, training remotely and adapting to growth.”
Claim experiences during the pandemic varied based on the client. During the first placements of reopening, insurers were not willing to offer communicable disease coverage for sports and entertainment but there were some exceptions in contingency programs for clients that wrote enough business.
On the general liability side, underwriters are most concerned with risk mitigation, risk engineering, and safety preparations for an event. Contingency underwriters, meanwhile, are primarily concerned whether an event is actually going to happen or not.
“There are some claims that have crossover, but contingency underwriters stayed open for business and were more willing to receive submissions and quotes than liability underwriters because they were well insulated,” McCarroll noted.
Private entities, such as promoters, have, in many cases, chosen to take a path of focusing on as much risk mitigation as possible for themselves without the contingency market even needing to push on them.
“I haven’t had a scenario where we built a submission for a festival that didn’t include what the festival is doing about COVID,” he said. “Clients moved very aggressively and quickly to protect themselves from being an event that spreads COVID. They’ve been so weary of the big liability fallout that can happen from big events, that they’ve been as proactive as possible.”
McCarroll worked on some of the earlier festivals that came back in May 2021 - attendees were required to show proof of vaccination or a negative COVID test within 48-72 hours of the event. The industry and promoters have been consistently leaning towards safety to avoid another complete lockdown.
“We’re all likely to be called on to participate in mitigation efforts if we want to go to sports and music events that we all love and miss,” said McCarroll. “Let’s do our best to help these promotors, leagues and venue owners be back in business.”