Looking at the impact on Sports Event Insurance
The Boston Marathon terrorist attack has sent shock waves through the sports event insurance industry, creating uncertainty about whether certain event coverages will be offered and at what limits. At a minimum, terrorism premiums for high-risk events are expected to skyrocket.
After the 9/11 terrorist attack, underwriters responded with enhanced risk management for arenas and stadiums. However, closed venues are much easier to secure than open events such as a marathon that has a 26.2 mile course.
The 9/11 attacks also resulted in private insurance carriers excluding terrorism coverage under General Liability policies, which was picked up by the federal government for a buyback of less than 5% of private insurance premiums in most cases. After 9/11, the terrorism coverage buyback was typically only purchased by larger event promoters in major population centers. However, the Boston attack has given rise to speculation that the terrorism buyback will become much more expensive and many smaller event promoters outside of the major population centers will be interested in its purchase.
The next question is what type of liability event promoters and organizers have in the first place to prevent terrorist attacks. At first glance, event security against terrorist attacks would primarily be a matter for law enforcement. However, event promoters and organizers can have liability for not implementing risk management controls and coordinating with law enforcement. The industry will undoubtedly respond with enhanced risk management requirements based on the lessons learned from the Boston attack.