London domiciled insurance and reinsurance company Beazley has launched Cancellation Plus in the UK, a parametric rainfall product that’s sold alongside its event cancellation product, which provides event organisers with protection against reduced revenue as a result of rainfall occurrence.
Beazley provides contingency and cancellation insurance solutions to a wide range of events each year, including festivals, global sporting events and concerts.
The insurance and reinsurance company has now expanded its events industry services in the UK with the launch of Cancellation Plus, a product designed to provide event organisers with revenue protection in the occurrence of reduced ticket sales and concessions as a result of rainfall impacting their event.
“Events carry a wide range of risks including non-appearance by performers, power failure, bad weather and other areas outside the control of the organisers. Cancellation Plus offers organisers the ability to guarantee a proportion of their income, even if wet weather keeps people away,” said Michael Price, UK contingency underwriter for Beazley.
The product utilises a parametric trigger structure that pays out a portion of the projected gross revenue for the event, should a pre-determined level of rainfall take place within the pre-set time frame selected by the event organiser, explains Beazley.
The product is available in conjunction with a Beazley event cancellation policy, and really aims to provide organisers with a means of recouping lost profits for events in the UK that are negatively impacted by rainfall, but not cancelled.
Beazley explains that many events are cancelled, postponed or interrupted in the UK and elsewhere every year, and many more “experience poor weather conditions that keep last minute ticket buyers away and cause those in attendance to spend less time and money at the event.”
The UK often experiences intense rainfall in many parts of the country throughout the year and also hosts a broad range of events that includes festivals, concerts, sporting events and so on.
While rainfall for an indoor sporting event or concert, for example, is unlikely to result in the cancellation of the actual event, it might result in reduced attendance or early departures, so it’s easy to see where the Cancellation Plus solution could be effective.
In this way, using parametric triggers for weather insurance, reinsurance or risk transfer, can provide a highly valuable source of contingent business interruption coverage, paying out only when the specific weather conditions that a company or entity knows will hurt its business or event occur.
Artemis discussed towards the end of last year how Beazley had launched a new parametric weather insurance product in Australia, in Weather Guard; a solution the firm said enables businesses to protect themselves from “weather related revenue shortfalls.”
This, plus the new Cancellation Plus product highlights the potential and effective use of parametric triggers, a common feature of the insurance-linked securities (ILS) space and broader reinsurance market, in providing protection with a rapid payout that’s set to pre-determined triggers, such as rainfall volumes.