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EVENT INSURANCE By Ian Stack Action Entertainment Insurance (a Division of Action Insurance Brokers)

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Presentation on theme: "EVENT INSURANCE By Ian Stack Action Entertainment Insurance (a Division of Action Insurance Brokers)"— Presentation transcript:

1 EVENT INSURANCE By Ian Stack Action Entertainment Insurance (a Division of Action Insurance Brokers)

2 TOPICS Types of Insurances Available to Event OrganisersTypes of Insurances Available to Event Organisers The Importance of Risk ManagementThe Importance of Risk Management Public Liability - Why is my premium so expensive?Public Liability - Why is my premium so expensive? Tort ReformTort Reform Indemnity Agreements - Be Careful What you SignIndemnity Agreements - Be Careful What you Sign Benefits of Using an Insurance BrokerBenefits of Using an Insurance Broker

3 Types of Insurance Public/Products LiabilityPublic/Products Liability Professional IndemnityProfessional Indemnity Cancellation & AbandonmentCancellation & Abandonment Workers CompensationWorkers Compensation Equipment InsuranceEquipment Insurance

4 Public/Products Liability SUMMARY OF COVER: To indemnify the Insured (Event Organiser) for their legal liability to compensate third parties (injured person/s) for personal injury or damage to their property, where such personal injury or property damage arises from the Insured’s negligent actions.

5 Principal Exclusions (summary) CLAIMS ARISING FROM: INJURY TO EMPLOYEES (WORKERS COMPENSATION)INJURY TO EMPLOYEES (WORKERS COMPENSATION) USE OF REGISTERED MOTOR VEHICLESUSE OF REGISTERED MOTOR VEHICLES USE OF WATERCRAFT (LENGTH LIMITS APPLY)USE OF WATERCRAFT (LENGTH LIMITS APPLY) USE OF AIRCRAFTUSE OF AIRCRAFT PROFESSIONAL NEGLIGENCEPROFESSIONAL NEGLIGENCE CONTRACTUAL LIABILITYCONTRACTUAL LIABILITY.

6 Common Misconceptions THE VENUE HAS THEIR OWN LIABILITY INSURANCE THEREFORE I DON’T NEED TO TAKE OUT COVER. MY POLICY COVERS MY CONTRACTORS. I DON’T NEED COVER AS THE COMPANY THAT HAS CONTRACTED ME TO ORGANISE THE EVENT HAS TAKEN OUT INSURANCE ON THE EVENT.

7 PROFESSIONAL INDEMNITY SUMMARY OF COVER CIVIL LIABILITY CLAIMS ARISING FROM THE CONDUCT OF INSURED’S PROFESSIONAL BUSINESS PRACTICE. BREACH OF PROFESSIONAL DUTYBREACH OF PROFESSIONAL DUTY DEFAMATIONDEFAMATION LOSS OF DOCUMENTSLOSS OF DOCUMENTS DISHONEST OR FRAUDULANT ACTS OF AN EMPLOYEEDISHONEST OR FRAUDULANT ACTS OF AN EMPLOYEE UNINTENTIONAL INFRINGEMENT OF COPYRIGHT LAWSUNINTENTIONAL INFRINGEMENT OF COPYRIGHT LAWS SOME BREACHS OF THE TRADE PRACTISE ACTSOME BREACHS OF THE TRADE PRACTISE ACT

8 Principal Exclusion (Summary) PUBLIC/PRODUCTS LIABILITY CLAIMSPUBLIC/PRODUCTS LIABILITY CLAIMS CRIMINAL ACTS BY THE INSUREDCRIMINAL ACTS BY THE INSURED OVER-RUNNING OF BUDGETOVER-RUNNING OF BUDGET PERSONAL INJURY OR PROPERTY DAMAGE CLAIMSPERSONAL INJURY OR PROPERTY DAMAGE CLAIMS

9 Cancellation/Abandonment SUMMARY OF COVER CANCELLATION, ABANDONMENT, POSTPONEMENT OR INTERRUPTION OF EVENT CAUSED BY AN INSURED PERIL: DAMAGE TO VENUEDAMAGE TO VENUE DELAY IN TRANSPORT (vehicle breakdown, airline strike etc)DELAY IN TRANSPORT (vehicle breakdown, airline strike etc) ADVERSE WEATHER CONDITIONS (outdoor events)ADVERSE WEATHER CONDITIONS (outdoor events) NON-APPEARANCE OF PERFORMER / GUEST SPEAKERNON-APPEARANCE OF PERFORMER / GUEST SPEAKER

10 Principal Exclusions (Summary) SHORT FALL IN ATTENDANCESHORT FALL IN ATTENDANCE CANCELLATION DUE TO CONTRACTUAL PROBLEMSCANCELLATION DUE TO CONTRACTUAL PROBLEMS TERRORISMTERRORISM

11 Workers Compensation COMPULSORY INSURANCE FOR ALL EMPLOYERS.COMPULSORY INSURANCE FOR ALL EMPLOYERS. MAY NEED TO TAKE OUT WORKERS COMPENSATION FOR SOME CONTRACTORS AND SUB-CONTRACTORS.MAY NEED TO TAKE OUT WORKERS COMPENSATION FOR SOME CONTRACTORS AND SUB-CONTRACTORS. POLICIES MAY BE REQUIRED IN EACH STATE OF AUSTRALIA.POLICIES MAY BE REQUIRED IN EACH STATE OF AUSTRALIA.

12 Equipment Insurance COVERS LOSS OR DAMAGE INCLUDING THEFT, FIRE, WEATHER PERILS, MALICIOUS DAMAGE AND TRANSIT DAMAGE. RECOMMENDED IF YOU ARE HIRING OR BORROWING EQUIPMENT FOR YOUR EVENT.

13 RISK MANAGEMENT RISK is the chance of something happening that will have an adverse effect on the organisation or individual. RISK MANAGEMENT is the process of planning, organising, leading and controlling the activities of an organisation in order to minimize the adverse effects of accidental losses on that organisation at reasonable cost.

14 Five Basic Risk Management Steps RISK INDENTIFICATION RISK QUANTIFICATION RISK AVOIDANCE RISK AVOIDANCE RISK CONTROL RISK FINANCING

15 Risk Identification NEED TO ESTABLISH THE SERIOUSNESS OF THE PROBLEM.NEED TO ESTABLISH THE SERIOUSNESS OF THE PROBLEM. NEED TO ESTABLISH THE EFFECT THESE RISKS COULD HAVE ON THE ORGANISATION.NEED TO ESTABLISH THE EFFECT THESE RISKS COULD HAVE ON THE ORGANISATION. PROCESS INVOLVES:PROCESS INVOLVES: - Interviewing management - Inspecting sites - Analysing flow charts - Reviewing past claims history

16 Risk Quantification MEASURING THE EXTENT OF THE PROBLEMS THAT COULD RESULT FROM A RISK HAPPENING. MEASURING LOSS FREQUENCIES AND LOSS SEVERITY. METHODS INCLUDE: - Statistical analysis - Review of layout of event site

17 Risk Avoidance DECIDE NOT TO PROCEED WITH THE EVENT TO ENSURE THE RISK WILL NOT OCCUR.DECIDE NOT TO PROCEED WITH THE EVENT TO ENSURE THE RISK WILL NOT OCCUR. ELIMINATE THE HAZARD CAUSING THE RISK.ELIMINATE THE HAZARD CAUSING THE RISK. CONTRACT THE RESPONSIBILITIES OF THE RISK TO OTHERS.CONTRACT THE RESPONSIBILITIES OF THE RISK TO OTHERS.

18 Risk Control IMPLEMENT PHYSICAL RISK CONTROL MEASURES: - Better fire protection - More security guards

19 Risk Financing INSURANCE

20 PUBLIC LIABILITY - Why is my Premium so Expensive MAJOR PRESSURES ON LIABILITY INSURANCE: ATTITUDE OF SOCIETY - If something happens, someone pays.ATTITUDE OF SOCIETY - If something happens, someone pays. CHANGES TO REGULATIONS COVERING LAWYERS - No Win, No Pay.CHANGES TO REGULATIONS COVERING LAWYERS - No Win, No Pay. COURTS & LEGISLATION - Joint & Several Liability.COURTS & LEGISLATION - Joint & Several Liability. INCREASING NUMBER OF CLAIMS & CLAIMS COSTS - Between public liability claims increased from 55,000 to 88,000 - a 60% jump. Created a shortfall of $960 million.INCREASING NUMBER OF CLAIMS & CLAIMS COSTS - Between public liability claims increased from 55,000 to 88,000 - a 60% jump. Created a shortfall of $960 million.

21 (Cont.) LIABILITY INSURANCE IS ‘LONG TAIL BUSINESS’ - In 1994 the combined insurers loss ratio was 42% and in six years this increased to 121%.LIABILITY INSURANCE IS ‘LONG TAIL BUSINESS’ - In 1994 the combined insurers loss ratio was 42% and in six years this increased to 121%. PROLIFERATION OF HIGHER RISK RECREATIONAL ACTIVITIES - often undertaken by people who do not have the appropriate level of fitness for that activity.PROLIFERATION OF HIGHER RISK RECREATIONAL ACTIVITIES - often undertaken by people who do not have the appropriate level of fitness for that activity. COLLAPSE OF HIH INSURANCE - had a large share of the liability market, reduced the financial capacity of the insurance industry to provide liability insurance.COLLAPSE OF HIH INSURANCE - had a large share of the liability market, reduced the financial capacity of the insurance industry to provide liability insurance. TERRORIST ATTACT - SEPT 11 - the biggest insurance payout in history. Increased insurance costs across the global market. Reduction in capital and increased premiums.TERRORIST ATTACT - SEPT 11 - the biggest insurance payout in history. Increased insurance costs across the global market. Reduction in capital and increased premiums.

22 (Cont.) INSURANCE TAXES - stamp duty, GST, Fire Service Levy.INSURANCE TAXES - stamp duty, GST, Fire Service Levy. REDUCED INVESTMENT INCOME - Insurers are loosing money on their non-insurance investments and looking to their core business activities (insurance premiums) to raise revenue.REDUCED INVESTMENT INCOME - Insurers are loosing money on their non-insurance investments and looking to their core business activities (insurance premiums) to raise revenue. LACK OF COMPETITION IN THE AUSTRALIAN MARKET - mergers of major insurers, withdrawal of international insurers from the Australian market, Australian Insurers withdrawing from writing certain classes of insurance.LACK OF COMPETITION IN THE AUSTRALIAN MARKET - mergers of major insurers, withdrawal of international insurers from the Australian market, Australian Insurers withdrawing from writing certain classes of insurance.

23 TORT REFORM NEW SOUTH WALES - Civil Liability Act 2002 Maximum amount of damages that may be awarded for non- economic loss is $350,000.Maximum amount of damages that may be awarded for non- economic loss is $350,000. Maximum costs that may be recovered for legal services on personal injury claims up to $100,000 are to be capped:Maximum costs that may be recovered for legal services on personal injury claims up to $100,000 are to be capped: - a plaintiff - fixed at the greater of 20% of the amount received or $10,000 - a defendant - fixed at the greater of 20% of the amount sought by the plaintiff or $10,000

24 (cont). Solicitors and Barristers are prohibited from providing legal services on a claim for damages unless they reasonably believe that the claim has reasonable prospect of success.Solicitors and Barristers are prohibited from providing legal services on a claim for damages unless they reasonably believe that the claim has reasonable prospect of success. A person does not owe an injured person a duty of care to warn of risks that a reasonable person would consider obvious.A person does not owe an injured person a duty of care to warn of risks that a reasonable person would consider obvious. WaiversWaivers Intoxication - A court may only award damages to an intoxicated person for death, injury or property damage if the death, injury or property damage would have occurred if the person was not intoxicated. The intoxicated person is presumed to have been contributorily negligent to a degree of 25% or greater.Intoxication - A court may only award damages to an intoxicated person for death, injury or property damage if the death, injury or property damage would have occurred if the person was not intoxicated. The intoxicated person is presumed to have been contributorily negligent to a degree of 25% or greater.

25 (cont). Good SamaritanGood Samaritan VolunteersVolunteers ApologiesApologies Structure settlementsStructure settlements Limitation periodsLimitation periods

26 INDEMNITY AGREEMENTS OTHERWISE KNOWN AS ‘HOLD HARMLESS’ CLAUSES OR CONTRACTUAL LIABILITY.OTHERWISE KNOWN AS ‘HOLD HARMLESS’ CLAUSES OR CONTRACTUAL LIABILITY. DEFINITION - WHERE ONE PARTY ASSUMES THE LEGAL LIABILITY OF ANOTHER PARTY UNDER THE TERMS OF A CONTRACT (CONTRACTUAL LIABILITY).DEFINITION - WHERE ONE PARTY ASSUMES THE LEGAL LIABILITY OF ANOTHER PARTY UNDER THE TERMS OF A CONTRACT (CONTRACTUAL LIABILITY). COMMONLY FOUND IN VENUE HIRE CONTRACTS, AGREEMENTS WITH COUNCILS OR GOVERNMENT INSTITUTIONS, EQUIPMENT HIRE AGREEMENTS.COMMONLY FOUND IN VENUE HIRE CONTRACTS, AGREEMENTS WITH COUNCILS OR GOVERNMENT INSTITUTIONS, EQUIPMENT HIRE AGREEMENTS.

27 Indemnity Agreements & Their Effect of Public Liability Insurance CLAIMS ARISING FROM LIABILITY ASSUMED UNDER CONTRACT ARE EXCLUDED UNDER PUBLIC/PRODUCTS LIABILITY INSURANCE POLICIES.CLAIMS ARISING FROM LIABILITY ASSUMED UNDER CONTRACT ARE EXCLUDED UNDER PUBLIC/PRODUCTS LIABILITY INSURANCE POLICIES. POLICIES CAN SOMETIMES BE ENDORSED TO NOTE SPECIFIC INDEMNITY AGREEMENTS, SUBJECT TO INSURER’S APPROVAL.POLICIES CAN SOMETIMES BE ENDORSED TO NOTE SPECIFIC INDEMNITY AGREEMENTS, SUBJECT TO INSURER’S APPROVAL. LIABILITY CRISIS HAS MADE INDEMNITY AGREEMENTS ALMOST IMPOSSIBLE TO INSURE FOR - INSURERS DON’T LIKE COVERING OTHER PARTY’S NEGLIGENCE.LIABILITY CRISIS HAS MADE INDEMNITY AGREEMENTS ALMOST IMPOSSIBLE TO INSURE FOR - INSURERS DON’T LIKE COVERING OTHER PARTY’S NEGLIGENCE.

28 Indemnity Agreements - Solution AVOID SIGNING THEM !AVOID SIGNING THEM ! IF UNABLE TO AVOID THEM, TALK TO YOUR INSURANCE BROKER ABOUT HAVING THEM NOTED ON YOUR POLICY.IF UNABLE TO AVOID THEM, TALK TO YOUR INSURANCE BROKER ABOUT HAVING THEM NOTED ON YOUR POLICY. CONSIDER ‘INTERESTED PARTY’ ALTERNATIVECONSIDER ‘INTERESTED PARTY’ ALTERNATIVE

29 WHY USE AN INSURANCE BROKER ACTS AS AN AGENT FOR THE INSURED, NOT FOR THE INSURER.ACTS AS AN AGENT FOR THE INSURED, NOT FOR THE INSURER. NOW SUBJECT TO THE NEW FINANCIAL SERVICES ACTS - strong focus on consumer protection.NOW SUBJECT TO THE NEW FINANCIAL SERVICES ACTS - strong focus on consumer protection. NOT ONLY ORGANISES INSURANCE BUT ADVISES YOU ON HOW TO MANAGE ALL OF YOUR RISKS, REDUCE EXPOSURES IN ORDER TO KEEP INSURANCE COSTS DOWN.NOT ONLY ORGANISES INSURANCE BUT ADVISES YOU ON HOW TO MANAGE ALL OF YOUR RISKS, REDUCE EXPOSURES IN ORDER TO KEEP INSURANCE COSTS DOWN. SPECIALIST BROKERS FOR NICHE INDUSTRIESSPECIALIST BROKERS FOR NICHE INDUSTRIES


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