By Dominic Ellis
As event management companies seek innovative ways to host functions, it’s vital for planners to be covered for every eventuality. Dominic Ellis looks beyond the spectacle and delves into the paperwork.
As event management companies seek innovative ways to host functions, it's vital for planners to be covered for every eventuality. Dominic Ellis looks beyond the spectacle and delves into the paperwork.
When the corks start popping and the great and the good of the meetings industry are rubbing shoulders with one another, the last thing on anyone's mind is insurance. But going into any event without the necessary protection is like taking to the football pitch without your boots - it doesn't stop you playing, but you'd be a fool to do it.
Insurance may be one of those background hindrances for most event businesses, particularly when considering for most industries, profit, planning and profile are higher up the glamour ladder than paperwork, but policies always need to be kept up-to-date and flexible enough to cover every eventuality.
The limitation clauses will basically render the cover ineffective.
Seasoned event managers concur that events are one big, imprecise science; if anything can happen, it will. As the Gulf's meeting industry has proliferated in the last two years, everyone's under greater pressure to deliver; planners, organisers, caterers, entertainers, you name it.
But just because there may be multiple suppliers and intermediaries employed, it doesn't abrogate responsibility; in fact, when something goes wrong, all parties are liable - something corporate planners need to keep in mind.
It is a complex business. A European company looking to organise an event in Dubai will usually contract a Europe-based meetings and events organiser, who will in turn contract a local destination management company (DMC) or event management company (EMC), who will enter into a contract with a hotel to organise a dinner in its ballroom; even then it might not end, as the hotel may contract an outside supplier to provide decoration and lighting at the event.
The golden rule is that it is the responsibility of each party to ensure that the following party in the supply chain has secured all appropriate levels of insurance cover.
Some irresponsible companies, at any level within the chain, may choose to overlook and ignore part of their obligations - which indeed, are legal obligations in the western world.
These voluntary or involuntary ‘omissions' are often due to the substantial amount of work and the attention to detail needed - all of which takes up time and money, according to senior vice-president of Arabian Adventures and Congress Solutions International, Frederic Bardin.
"Such occurrences are unfortunately still relatively common in the industry around the globe, and even more so in this part of the world, where the related laws are not as demanding as, say, in Europe."
Barding states that Arabian Adventures will simply refuse to contract certain services such as quad biking on behalf of its clients; indeed most insurance companies will even refuse to provide any cover for this kind of hazardous activity.
"If and when the insurance companies do provide a cover, the limitation clauses will basically render the cover ineffective in case of an accident.
"This strict approach of ours may occasionally lead to the loss of an overseas client to local competitors, but we will not compromise on this approach. In fact, we would consider it irresponsible to act in any other way," Bardin adds.
It is therefore of paramount importance that corporate event planners establish that all aspects of their event are covered - even if they outsource their planning responsibilities to a third party.
Any EMC, to have full protection, needs to take insurance right from the time they start to ship materials to the site (marine cover), then erection of materials in the site (construction), cover for the erected materials (fire/property) for the exhibition period, then cover for dismantling the erected materials on completion of the event (again, construction cover).They also need to cover their legal liability to third parties and customers during the event period (third party liability cover) and, in the event of cancellation due to natural perils, protect against cancellation risk - as well as materials being returned to their points of origin.
Primarily, the scope of event insurance cover includes:
• Event cancellation, which provides for the financial loss arising out of the cancellation due to unavoidable situations and events
As a general rule it is the responsibility of the negligent person to pay.
• Event manager's liability, which provides for the third party legal liability arising out of the event, and is therefore linked to the nature of the event and associated exposure, if it is a public event or otherwise
EMCs that host similar events throughout the year are advised to go for annual cover because, through economies of scale, they are often cheaper than single event premiums; they provide automatic coverage so long as the event falls within the scope of their annual policy; and it's less of a headache administratively, as you don't have to negotiate with the insurer on each individual event.
Any deviations from the event defined in your annual cover should be advised and an insurer's approval sought before commencement of the event - but one of the problems is that there are not many companies regionally currently providing this service, explains technical manager RSA and Oman for Royal and SunAlliance, John Ramesh.
"Not many companies are specialised in providing a comprehensive cover for event management because of lack of experience in the field and at least, in the past, it was not worth investing time and money in gaining such specialisation.
"However, with the booming economy, we foresee many events to take place and this would provide ample opportunity to insurers to study and learn from the experience."
A.K.Ravi, deputy regional technical and marine manager for AXA Insurance Gulf, agrees that event insurance has yet to gain prominence in the region, though more professionally managed events are coming to the region.
"As the demand and volume remain low from the region, specialist markets are yet to give more attention - hence there's less availability."
AXA can underwrite small to medium size event cancellation covers locally, but event liability covers are more complex and requires the support of a specialist market.
From an insurer's viewpoint, liability would arise only when the third party or customers are physically injured or any physical loss or damage caused to the third party's property.
As a matter of course, companies should have a permanent third party liability cover, which will insure them against risks associated with their most frequent activities.
Arabian Adventures for example, organises four-wheel-drive trips into the desert every day of the year, so that particular activity is incorporated into its permanent annual insurance cover.
Following on from third party liability, an insurance cover should also include basics such as comprehensive vehicle insurance for the transport of clients.
"This is a critical requirement that is sadly not yet taken seriously by many so-called EMCs or DMCs in the region," Bardin explains.
A company organising only a very limited number of events every year would opt for ad-hoc cover for each event. That said, an EMC that has annual insurance cover for general purposes can also subscribe to an additional insurance for specific activities during a specific event.In essence, the main point for planners to remember when dealing with insurance is to make sure everything to do with the event has been covered. To only deal with 98% of the necessary cover for an event could leave the company with a nasty and costly aftertaste.
Disgruntled clients may complain if an EMC fails to deliver on its promises, but it won't be held liable.
Meeting customers' expectations can be clarified by entering into ‘Contracts for Services' at every level of the chain. Not only do such contracts ensure a common understanding about each party's legal obligations and commitments, they also ‘force' each party to scrutinise in depth all the details of its offer to the next level in the chain of suppliers. This therefore ensures a smoother running of the event and eliminates any ‘surprises'.
An EMC can even insure an event against loss-making - the insurance company would cover all or part of the losses in case the event doesn't generate the anticipated ROI.
Don't cut corners
Insurance companies in the region are not well geared to handle special requests and EMCs face the arduous task of ‘educating' their insurers about their (EMC) business.
But as the event industry evolves, it is anticipated that major insurance companies will eventually become pro-active in meeting the requirements of their existing or potential clients.
This situation, combined with what some consider a rather nonchalant attitude on the part of many self-styled EMCs, does lead to some of them cutting corners.
It is up to the end-client, the corporation or company that requests an EMC to organise an event on its behalf, to secure the appropriate insurance cover in order to protect its assets, staff and clients.
Having a exhaustive motoring policy is essential, particularly in the UAE where traffic accidents are on the rise. In the absence of cover, the minimum costs are those associated with the repairs or replacement of the vehicle(s); in the worst case scenario, where there are injuries to persons or fatalities, the amounts involved can easily run into the millions.
Event management contracts generally specify insurance requirements to be complied with in order to satisfy the principals and/or the venue owners and most often joint interest is required to be noted in the insurance cover.
EMCs have to learn to spend the time reading the proposed insurance policies, where ‘exclusions' often matter as much as, or more than, ‘inclusions', as well as to comprehend the legal implications associated with insurance issues. If you're in any doubt, always check with your insurer.
As a general rule, it is the responsibility of the negligent person to pay for any damages caused through negligence. For instance, the organiser would be responsible for any damages to the hotel if the damages caused are proven to be because of negligence.
However, there could be instances where the loss has occurred not because of the host's negligence, but during the course of the event.
It is always advisable that hosts keep their insurers informed where and when all events are taking place.