Sunday, December 02, 2012

From the P&C Files: Marathon Insurance

No, not that Marathon, this one:

"The New York Roadrunners Club and its insurers have been waging a pitched battle the past four weeks over how much money race organizers will be able to reclaim in the wake of last month's canceled New York City Marathon."

When Mayor Bloomberg cancelled the annual event (in the wake of Hurricane Sandy), it seemed like the right thing to do. After all, tens (if not hundreds) of thousands of area residents were still without power, and relief efforts were (at best) haphazard. Add in the fact that area hotels were at capacity with displaced storm survivors, and there seemed no reasonable way to actually hold the run.

Now, in addition to all the other financial headaches, there's the matter of the non-refundable entry fees prospective participants had to pony up for a chance at glory, and the millions more would-be spectators had plunked down for tickets.

Hard to believe but we first covered the concept of "Special Event" insurance over 6 years ago:

"Special Event insurance is just that: coverage to protect one from a sudden loss during some unusual activity or promotion. Think "$1 million Hole In One Contest."

Well, the New York City marathon is indeed a "special event," and had (propitiously) obtained coverage through a Lloyd's of London syndicate. Of course, these things are never as simple as they might at first appear:

"A person familiar with the Lloyd's deliberations said the company already has authorized a "large payment," a sign that it has acknowledged liability, even though the running club actually decided on its own to cancel the race. The person said Lloyd's is still working with NYRR officials regarding the size of the payment, and a significant disagreement remains."

Of course, of course.

The "disagreement" stems from the fact that the event organizers don't "have enough money to refund all the investments made in the race by runners, sponsors, broadcasters and the travel partners who arranged trips for foreign participants."

On the other hand, "the marathon has a clear no-refund policy, even if severe weather forces organizers to cancel the race." So it's unclear (at least to me) why there's a problem: doesn't "no" mean "no?"

Beats me.
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