Nightclub Tragedies to Worsen Already Volatile Marketplace

April 18, 2003

The recent nightclub tragedies in Chicago and Rhode Island, which all told killed 120 people, will lead to stricter underwriting and discourage new carriers from entering that volatile market, according to a broker who has placed entertainment risks for 10 years.

Premiums for nightclubs and taverns have gone up between 30 and 150 percent in the last year, even before the stampede at Chicago’s E2 and the fire that burned The Station in Rhode Island, according to James Chippendale, president of Dallas-based CSI Entertainment Insurance.

“Carriers come and go, programs come and go, clients come and go,” Chippendale said. “So, it is a very high service-oriented business. You almost have to change carriers on an annual basis.”

How the carriers who are already in the market will react is an open question, according to Chippendale, whose CSI produces insurance for 600 nightclubs, taverns and bars in 25 states.

“Carriers that are in it and that have been for a while will view these events as kind of a bump in the road, while acknowledging the need to be more proactive,” Chippendale said. “A lot of carriers are going to ask about pyrotechnics, for example. What’s going to happen is it’s going to be excluded on all these policies. With regard to the Chicago claims, we’re going to see more questions about code violations, and companies will start checking if there’s any public record of code violations. They’ll use that as part of their underwriting criteria.”

The bottom line, Chippendale said, is that “carriers will be less willing to jump into it or probably put it on the back burner because of what’s happened.”

Editor’s Note: To see full story, see the April 21 issue of Insurance Journal West and Insurance Journal Texas/South Central.

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