For the first time since World War II, Wimbledon, one of Great Britain’s most storied summer sporting events, has been cancelled. The announcement from the All England Club came on April 1, 2020 amidst concerns for public health and safety stemming from the ongoing COVID-19 pandemic.
Scheduled to run from June 29 to July 12, the oldest tennis tournament in the world now becomes part of a growing list of sporting and entertainment events around the globe forced to cancel or reschedule due to the coronavirus outbreak. Unlike one-day sporting events, Wimbledon functions more like a festival for which nearly two months of pre-event preparation are required. Citing government mandated lockdowns and social distancing guidelines, the Board of the All England Club and the Committee of Management of the Championships made the difficult decision to cancel the event rather than attempt to reschedule later this summer.
Decisions to cancel major sporting and entertainment events will undoubtedly have wide-reaching effects and consequences, creating complex challenges pertaining to, amongst other things, contractual relationships with venues, suppliers, sponsors and broadcasting partners, financing agreements, as well as labour relations with employees and unions.
A Substantial Economic Impact
Although the decision to cancel Wimbledon may seem to be just one of many similar announcements to be expected over the coming months, it is of particular interest to insureds and insurers alike. British daily national newspaper The Times recently reported that the All England Club is set to receive around £114 million ($198 million) from its insurance policy, more specifically an infectious or communicable diseases and pandemic clause that was added to their policy several years ago. Reports suggest that following the SARS outbreak in 2002, the Club’s risk and finance subcommittee updated its Wimbledon policy to include the latter. Wimbledon appears to be the only one of tennis’s grand slams (Australian Open, French Open and US Open) to have obtained such additional coverage.
Days after the Wimbledon announcement, the R&A followed suit by announcing that the British Open, one of golf’s premier major events scheduled to be held from July 12 to 19, was also cancelled. Part of the decision to cancel instead of rescheduling like other golf events including the Masters and PGA Championship had to do with insurance considerations. Because of the language contained within their policy, R&A reportedly had to cancel the event before a certain date in order to trigger coverage and collect on its policy.
Foreseeable Changes in the Insurance Market
With many insurers set to face questions regarding coverage in the coming months, particular attention will be given to the wording of each policy’s force majeure clause. While some force majeure clauses may specifically address the issue of a “pandemic” or “outbreak”, the COVID-19 crisis may fall under other categories of the policy. Policy provisions are likely to be scrutinized including but not limited to clauses pertaining to:
- the notion of “emergency”;
- unexpected eventuality beyond the control of the impacted party;
- material adverse change and material adverse effect clauses.
Additional consideration must also be given to the forced closure of non-essential businesses which may fall under “government action” or similar language if provided for in a particular policy.
Regardless of the outcome, it can be anticipated that the insurance market will need to adapt quickly. Pandemic and outbreak coverage will likely be sought by sporting and entertainment event organizers across the world as they try to adjust to the rapidly changing global economic landscape.
It remains to be seen how government mandated guidelines regarding public health and safety will impact current policy wording, and what kind of consideration will be given to the voluntary (or involuntary) nature of these cancellations. Considering that many countries’ guidelines are fluid from day to day and do not necessarily set an end date for the measures already in place, one certainty that remains in this uncertain world is that the business of insurance will never be the same.
As your trusted partners for nearly a century, RSS’ team of professionals are equipped to help guide you or your company through these difficult times. Our Sanitary Compliance Team was specifically designed and tasked with helping you resume your business activities quickly while managing the legal issues and risks related to COVID-19. Our experts will help navigate you through this crisis by not only providing answers and solutions to your immediate needs and concerns pertaining to insurance, contractual and labour relations, but also be your trusted allies as the world marches back towards normalcy.