Carl Baxter, Sports and Entertainment Broker at Miller Insurance Services LLP, and former elite Badminton player, gives his expert views on the changing risks facing sports event organisers from managing client’s risk appetites, exploring exposure and an ageing monarchy.
Before we get into your current role, tell us a little about your career journey to date and notably your life as a leading elite Badminton player?
I was born and raised in Canada and after high school I was at a bit of a crossroads. In Canada, unless you play one of the top four sports it’s almost impossible to play sport at an elite level. So as a badminton player I was considering my options and thanks to my British grandmother I was eligible for an ancestry visa. I went to the University of Bath, played full time, stayed in the country, got my citizenship and I was then on the UK Sport programme for a number of years. My highest national ranking was 1 and my highest world ranking was 25. I played men’s singles for about ten years and then in 2012 when I did not qualify for the London Olympics, I hung up my rackets and looked for the next adventure. I met my now boss James Hands who gave me two months of work experience and everything went from there.
One of your areas of expertise is contingency, what does that protect event organisers and rights holders against?
Contingency is one of those things that covers pretty much everything that doesn’t fall into a box elsewhere - event cancellation and non-appearance insurance being the big two areas. It covers everything from lotteries to broadcast transmission failure to liability, death and disgrace, contractual bonuses and more.
What are the more common examples of these policies being used in sport?
Major one-off events, for example the upcoming Cricket World Cup or Rugby World Cup, are all susceptible to multiple factors. A lot of them are weather focussed but it really comes down the client’s specific exposure to the event and the budget they are trying to protect.
There will be numerous different interests that different stakeholders are trying to protect. For the Rugby World Cup, there will be the host rugby union, World Rugby, sponsors and many more. Most entities that have a financial interest in a major event will have an exposure.
The art of our role is looking at a client’s specific exposure and putting together a policy that protects them appropriately.
What is the best way for the different stakeholders to assess their risk?
It’s always best to look at their exposure and the budget they are trying to protect first, before considering the external factors. Some stakeholders won’t necessarily need insurance for some events. For other events it would be crazy not to have the right cover in place.
Take some cricket matches where the amount that is being paid for broadcast rights per game is vast, close to Premier League season rights in the UK In such a case if one of those games is cancelled it could cause a very significant loss in revenue. No matter how big your company is, you can’t afford to lose that sort of money.
It’s all specific to the client. With ticketing for example, the host might have an exposure to weather but the rights holder may not. On the other hand, the rights holder may be in danger of losing commercial revenue.
How do you help clients make the right decisions?
It breaks down into a few areas. You have the risk itself, then there is the exposure that the client is facing and then you have the risk appetite of each client. We are risk advisors; we can’t make decisions for the client but we help them to make an informed and educated decision.
Another of your specialist areas is personal accident insurance, how does the risk appetite vary there?
Because of the nature of it the risk appetite is normally a lot less! If an athlete is posed with a possible career-ending injury that obviously hits home a lot more and they will want to ensure that they are covered for future earnings to give them some comfort while they consider a different career. If it’s a business insurance purchase, you are talking more about asset protection and then everyone tends to have a different view on risk appetite.
There might also be personal accident insurance relating to participants at events which could extend to amateur participants, employees and even spectators in some cases.
Looking back at the BT Sport Industry Awards where Miller partnered with the Event of the Year category, there was a good spread of sports showcased. How would you start to assess the risk each event faces?
The two main things to begin with are what sport it is and whether it’s indoors or not. Then, is it a one-off event or a whole series of events. As mentioned earlier, weather is a major factor. So outdoor grass-court tennis is obviously much more susceptible to cancellation due to weather compared to esports taking place indoors. That said, weather situations could still lead to an esports event being cancelled, but the risk is clearly lower.
The winner of this award, The Ryder Cup, has historically faced some challenges such as post 9/11 when the event was postponed for a year because the US team didn’t want to travel. Also, serious weather claims after Celtic Manor when they had to go into an extra day on the Monday incurring significant extra costs but no new revenue. The right policy will cover additional costs as well as loss of revenue.
It’s a case of delving into the contracts and seeing how they are put together and where the gaps and exposure lies.
What are the growing trends that you are seeing the sports events organisers having to consider?
Terrorism is always a factor. This includes terrorist acts, threats and one that is coming up more often now is fear of terrorism which is when it’s not a confirmed threat but it still affects the event. There is also an increasing need for event cancellation policies due to public sentiment following acts of terrorism, regardless of there being a direct logistical need to cancel the event.
One that is a concern in the UK market especially is national mourning given our elderly monarchs. That’s always a hot topic when placing cover for a UK event, even more so if you are holding that event in a venue that would be involved in the mourning such as any of the Royal Parks.
And what policies are you seeing less demand for?
Communicable disease five years ago was very relevant, but then there isn’t an outbreak for a while and people tend to worry less. However, there was the recent case of equine flu earlier this year so now everyone in the horseracing industry is very aware of it again.
It’s always best to buy in advance. Communicable disease policies are relatively cheap now but obviously as soon as there is an outbreak of any sort the price will go up. This is the same for terrorism or weather or anything, it’s more beneficial and cost effective to be proactive rather than reactive. This all goes back the advisory role that we have. As soon as a client has any sort of financial exposure it’s worth protecting it from the outset.