Samuel Casey
Howden is the broker on the festival’s event-cancellation policy, with exposure to the claim spread throughout the London market.
The substantial claim hits a market still reeling from a devastating spell of claims stemming from the Covid-19 pandemic, which caused an unforeseen shutdown of events across the globe.
The comparatively small contingency sector accounted for a major proportion of Covid-19 losses last year, with underwriters having offered communicable disease cover as a buyback in policies, an option which was commonly taken up.
In Lloyd’s, the class of business accounted for almost half of gross Covid-19 claims in 2020, registering £2.9bn ($4bn) of gross losses.
Bonnaroo was due to take place in Manchester, Tennessee, last weekend, and featured a star-studded line-up including Foo Fighters, Lizzo and Tame Impala.
However, saturated ground caused by heavy rains from Hurricane Ida forced the organisers to cancel the event.
Sources said the claim hit the market at an unfortunate time, with business just starting to pick up and rates showing substantial improvement.
The contingency sector had been hit by the dual challenge of massive claims and a drying-up of business, with ongoing restrictions on gatherings limiting its premium income, which is still well below pre-pandemic levels.
Several markets have opted to abandon the class following heavy claims, including Markel International, Talbot and WRB Underwriting.
Meanwhile, the prospect of future rate improvements has attracted new entrants, with Convex, Fidelis, Cincinnati Global and Arch all having launched into the class.
Howden declined to comment. Bonnaroo did not respond to a request for comment.
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