Insurers Review Middle East Events Policies After War Leads to Cancellations

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Some insurers are excluding Israel, Lebanon and other Middle Eastern countries from their event cancellation policies after the Israel-Hamas war resulted in some activities being pulled.

European Aquatics last week called off the continental water polo championships, which was scheduled to take place in Israel in January, because of the ongoing conflict.

“Insurers in the cancellation contingency space are beginning to err on the side of caution,” said Edel Ryan, a senior executive at broker Marsh.

Organizers of large events often buy cancellation insurance one to two years in advance. Such policies typically exclude war or terror attacks. Many organizers choose to buy that cover through an add-on political violence and terrorism policy.

“Some (insurers) have stated that they will not be looking at writing new business in certain territories or are having very clear specific exclusions around those territories, particularly in the Middle East — but of course Israel and Lebanon were quoted,” Ryan said.

Insurers cannot change policy wordings of existing policies, so any event organizers who bought political violence cover and canceled after the conflict started on Oct 7 should be covered.

But new policies are likely to exclude Israel, Lebanon and countries neighboring Israel such as Egypt and Jordan, three sources told Reuters, standard practice after a war breaks out.

Insurers are also considering restricting cover for event cancellations outside the region, the sources added.

MTV last month canceled its Europe Music Awards, which were due to take place in Paris on Nov 5, citing “the volatility of world events” amid the ongoing conflict in Israel and Gaza.

MTV had no immediate comment on its cover.

Ryan at Marsh said some political violence insurers were proposing wordings which would allow them to break or review policies due to “conditions relating to armed involvement in the 2023 Israel war.”

A second broker, who declined to be named due to client confidentiality, said insurers were considering rewording policies which would allow them to exclude events from cancellation cover due to war-related attacks, giving the hypothetical example of an assault on a European airport.

Washington wants to prevent a wider regional conflict after Hamas burst into Israel on Oct 7. in the deadliest attack in the country’s history. Israel has responded with air strikes, encircling the militant group’s main stronghold of Gaza City.

Specialist political violence policies are typically offered by firms operating in the Lloyd’s of London insurance market, as well as by U.S. insurers.

Fewer major insured events take place around the world in the Northern hemisphere winter and sources said they had not seen premium rates rise yet as a result of the conflict.

But rates for political violence policies to protect against event cancellation, which can cover war, terrorism, sabotage, riots or civil commotion, have already as much as doubled in the last five years, they said, given a spike in incidents.

(Editing by Sinead Cruise and Alexander Smith)

Photograph: Rockets are fired from the Gaza Strip toward Israel over destroyed buildings following Israeli airstrikes on Gaza City, central Gaza Strip, on Thursday, Oct. 19, 2023. (AP Photo/Mohammed Dahman)