NEW YORK - 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 against occurrences beyond their control, such as
fire or hurricanes, that could ruin one-time occasions. In
the past few weeks, insurers decided that they would no longer
cover events canceled or hurt because of severe acute respiratory
syndrome, which has killed about 170 people and sickened about
3,000 worldwide.
"The fear factor about SARS is pretty significant," said Scott
T. Brady, director of Contingency Products Group at the insurance
broker, Aon Risk Services Inc. "Insurers don't really understand
it (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."
For example, Chubb Corp. had stopped underwriting event-cancellation
policies when the war in Iraq (news - web sites) began but
resumed offering them this week, albeit with a SARS exemption.
Brokers say the situation is similar to what happened in the
market after the Sept. 11 attacks 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 the brokerage firm Marsh
& McLennan Companies.
Terrorism exemptions stopped in the United States, at least,
after a law was passed requiring insurers to offer terrorism
insurance. Whether the trend in special events policies prompts
legislation remains to be seen.
Special events coverage is a tiny sliver of the $160 billion
commercial insurance market, according to the Insurance Information
Institute. And most special events policies are written months
in advance so near-term events canceled or hurt because of
SARS would be covered. Neither Brady nor Moore said they'd
seen any fallout such as canceling an event because of SARS
exemptions yet.
In the United States, some insurers will agree to eliminate
the exclusion.
However, such an elimination is more likely if the event will
be attended by people who don't travel outside the United
States much and doesn't draw an international audience. The
vast majority of SARS cases have been in Asia.
"Insurers would rather be safe than sorry," Moore said.
By
THERESA AGOVINO, AP Business Writer 
