Covering Trouble in Paradise
The Five W's of Incentive Trip Insurance
By Connie Jeske Crane
It was an event planner’s worst nightmare. In April 2010, after a 2,000-year slumber, Iceland’s Eyjafjallajökull volcano erupted, spewing a giant ash cloud into the skies. Deemed a risk to aircraft, the event triggered a seven-day shutdown of most European air traffic, and messed with 100,000 flights and 10 million passengers worldwide.
“Disruptive incidents do occur and they are happening in an increasing frequency these days,” notes a recent study by the Incentive Research Foundation (IRF), citing not just weather disruptions, but terror threats, virus outbreaks and unreliable vendors.
Troubling times perhaps but given the ROI attached to incentive travel, the IRF also sees the incentive industry keeping pace with a focus on risk mitigation. With insurance coverage a crucial element here, we revisited insurance guidelines with Derrick Leue, president of Toronto-based PROLINK Insurance Group for advice. Noting there’s a definite “education gap” in this area, Leue gave this advice on incentive trip insurance.
Planners are key to the process, says Leue. Rather than assuming a corporate client has insurance or that a venue does, he advises planners to look into who is covering event liability. “In general that’s the organization hosting the event, usually the corporation that has the incentive trip—so not the planner if they’re independent.” Planners should confirm whether the company has a general liability policy in place, says Leue, and that it covers incentive travel.
Alternately, he says, if event planners are contracted to handle or arrange event liability for incentive travel, they themselves need to contact an insurer and arrange coverage.
Around recommended coverage, Leue says:
- Commercial general liability is a must. If a bodily injury or property damage occurs at your incentive travel destination, “that policy is the one to respond.” The current recommendation is not less than $5 million of coverage, he says, adding that many venues are asking for proof of at least that much.
- With incentive travel, event cancellation policies are not a given. Planners should help determine requirements with both client and insurer.
- Independent event planners should consider taking out their own professional liability insurance.
- Whenever possible, ask event vendors for certificates of insurance.
Leue stresses early preparation. “You wouldn’t believe how many times we hear from a planner three days before an event that’s taking place in the Bahamas!” Ideally, contact your insurer 30 days in advance of travel.
No destination is safe from disruption, so the need for insurance applies to places near and far, says Leue.
The ultimate goal is peace of mind and giving your clients the best solutions possible. During the Icelandic volcano standstill, for example, Leue says his company, remarkably, managed a creative workaround to get a client to Amsterdam for an association meeting. The client had an event cancellation policy, so the insurer enlisted private jets and creative flight plans over Greenland to bypass floating ash. Says Leue: “That was cheaper than cancelling the event!”
- Disruptions are on the rise. But so are risk management initiatives, budgets and optimism, according to the Incentive Research Foundation:
- Of planners surveyed, 59% said they’ve experienced a disruption that affected the success of at least one event.
- The two most frequent disruptions are weather-related events (38%) and vendor failures (28%).
- Airlines are the most frequent cause of business partner-related disruptions via cancellations, delays and overbooking (61%).
- Disruptions have an average cost of $10,000 to $100,000.
- Planners estimated they spend up to 25% of their time planning for potential disruptions.
- In the next two years, 39% of planners expect to spend more time and effort to plan for disruptions.
- Incentive travel budgets increased by 4% year over year.
- The Net Optimism Score for the incentive travel industry rose almost 20 points last year.
SOURCES: IRF 2018 TRENDS STUDY; IRF 2016 EVENT DISRUPTION STUDY
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