Wildfire smoke and deteriorating air quality are moving from background concern to central underwriting factors for outdoor events in Canada. Yet one of the key tools for managing that volatility – event cancellation insurance – remains underused, according to Michael McDermott (pictured), head of sports, entertainment and contingency at HDI Global Speciality SE Canada.
Over recent years, wildfire activity has increased, particularly in Ontario and across Canada, forcing underwriters to pay closer attention to event location and local air quality when structuring policies. McDermott explained that Canada’s Air Quality Health Index (AQHI), which ranges from 1 at the low end to above 10 at the extreme, is now a core part of underwriting outdoor sports, concerts, and festivals. “When we had the wildfires here in Toronto a number of years ago, and we had it last year as well, there were incidents where, you get a recommendation that these events cannot happen,” he said.
He noted that thresholds differ by activity: strenuous outdoor sports can become unsafe once the AQHI reaches 7, while concerts face problems once readings hit 10. Historical precedent also matters. Toronto may see only intermittent effects, but other regions, such as British Columbia, face more frequent and severe episodes, requiring closer attention from underwriters.
McDermott stressed that insurers are not looking to shut events down, but to keep them viable. He said underwriters work with brokers and clients to understand how much risk they are prepared to retain, what they can realistically spend on cover, and then try to design programmes that match those parameters. In some cases, solutions aren’t possible, he acknowledged, but the aim is always to find fair, workable arrangements across event cancellation, liability and property insurance wherever they can.
McDermott flagged event cancellation as one of the biggest protection gaps, noting that many organizers skip it because they assume it will be prohibitively expensive. He said that when cover is treated as a late add‑on, any quote can feel like sticker shock, whereas building a realistic premium estimate into the budget from the outset makes it easier to absorb. As an example, he suggested that if an organizer plans for a $10,000 premium and the market comes back at $8,500, the cost is manageable – but if a $30,000 figure appears with no prior benchmark, it is far more likely to be rejected. He argued that engaging specialist brokers early can avoid that scenario by providing credible indications upfront and weaving risk transfer into initial planning.
Another common gap arises when organizers contract third-party providers for services such as security, food and beverage, or cannabis sales. McDermott stressed the importance of reviewing contractual agreements to ensure liability is appropriately allocated and that external partners carry adequate insurance. “If they engage an expert in the insurance broking field who understands the event space or sports space, they can identify potential gaps and help mitigate risk by transferring it to third parties to make sure that they have the insurance in place to protect them in the event something goes wrong,” he said.
Equipment rental also presents significant exposures. McDermott described organizers renting staging, bleachers, or lighting equipment and questioned who is responsible for setup, operation, and storage both before and after the event. Poorly managed or unsecured equipment can expose organizers to liability, particularly if weather events interfere.
McDermott offered practical advice for organizers. First, work with brokers who specialize in the event or sports space, attend events themselves, and understand the risks from both operational and insurance perspectives. Second, engage early. “A lot of the time, we find the event is happening next week and they need a GL policy. At HDI, we are committed to working with broker partners to create solutions. But if we start early, sometimes 12 months in advance, we can build out risk management plans, safety guidelines, and understand who’s responsible for security, food, and beverage services. Everyone’s life is easier when the process isn’t rushed.”
McDermott also highlighted evolving challenges, including cannabis sales, particularly in Alberta, and how third-party sales of controlled substances require careful oversight. Likewise, the proper handling of rented equipment before, during, and after events is critical to avoid claims.
Ultimately, McDermott said, successful risk management depends on collaboration: brokers, clients, and underwriters working together to ensure events are both safe and financially protected. “We like to partner with our brokers and our clients,” he said. “Our team isn’t scared of talking to clients with their brokers because it helps us understand the client’s pain points and what the broker’s pain points are. So we can come up with a collective solution that meets the client’s needs, while providing adequate risk management practices and processes.”
By integrating early planning, specialist expertise, and realistic budgeting, organizers can ensure that outdoor events survive increasingly unpredictable environmental conditions without sacrificing safety or financial protection – whether it’s wildfire smoke, extreme weather, or other operational hazards.
