Special Event Insurers Exclude SARS Coverage

Insurers have begun excluding SARS virus coverage from policies written for sponsors of special events such as concerts, trade shows and conventions because they know too little about the disease and its risks.

The exclusion affects event cancellation policies written to protect sponsors from occurrences beyond their control, such as fire or hurricanes, that could ruin one-time occasions.

In the last few weeks, insurers have decided that they no longer would cover events canceled or hurt because of severe acute respiratory syndrome, which has killed 170 people and sickened more than 3,000 worldwide.

“The fear factor about SARS is pretty significant,” said Scott T. Brady, director of the Contingency Products Group at insurance broker Aon Risk Services Inc.

“Insurers don’t really understand [SARS], and they can’t qualify the risk and they don’t want to take on any risk until they can figure out more about the disease,” he said.

Chubb Corp. stopped underwriting event cancellation policies when the war in Iraq began, but resumed offering them this week, albeit with a SARS exemption.

Brokers say the situation is similar to what happened after Sept. 11 when insurers began adding terrorism exemptions to such coverage.

“SARS has become the new terrorism,” said LeConte Moore, managing director of the entertainment and media practice in the New York office of Marsh Inc., a unit of brokerage firm Marsh & McLennan Cos.