Live music insurance: Adapting to a changing world

Event organisers have been urged not to treat cancellation insurance as a “necessary evil” as worries around extreme weather, civil unrest and other issues ramp up.

Promoters around the globe have long grappled with the impact of the unpredictable conditions on their events, with festivals such as Pohoda, Gazebo Festival, Sueños Music Festival, Slam Dunk Festival, Electric Love and Graspop all hampered last summer.

A new report by Green Music Australia, Rain, Heat, Repeat: How Music Fans Are Experiencing Extreme Weather,  found that 85% of festivalgoers had experienced what they perceived to be extreme weather at a music event over the past 12 months.

Leading broker Martin Goebbels of Miller Insurance says the subject is two-fold.

“The particular problem at the moment is both bad weather and excessive heat, so [insurance] prices have increased because climate change has increased cancellations,” he tells IQ.

Goebbels noted in 2024 that additional premiums for adverse weather had risen 50% in less than a decade, while premiums in North America have reportedly tripled in recent years. Earlier this year meanwhile, US festival Hinterland introduced a 90 Degree Guarantee which allows ticket holders the option to request festival admission ticket returns for any day predicted to reach 90° (32C) or higher.

“Excessive heat is increasingly a problem across most of the world – and that’s for both outdoor shows and indoor shows.” says Goebbels. “Certainly, there are a lot of places where indoor shows don’t have suitable ventilation and air conditioning, and in these increasing times of 40-odd degrees temperatures, it’s a danger. So weather is going to continue to be a problem.”

“The US has been impacted by extreme weather and fires, and this has an impact on both premiums and the conditions in the policies”

Tysers Live MD Tim Thornhill says demand for event cancellation and non-appearance policies has evolved over the last few years.

“This is as a result of both the appetite of insurers to offer it, which thankfully is improving, and the claims that have been seen in different countries,” he says. “Europe used to be cheaper than the UK, but the pricing is coming closer now. The US has been impacted by extreme weather and fires, and this has an impact on both premiums and the conditions in the policies.

“We have also seen contracts between artists and promoters evolve as well as those between promoters and suppliers. It’s important to make sure that these are provided to us as brokers to make sure that our clients are insured appropriately.”

London Market Partners (LMP) Group has developed what it bills as a “game-changing solution”, called FestiFLEX. The plan allows organisers to secure full cancellation cover while spreading the cost over multiple payments – with protection from the moment the first deposit is paid.

“Unfortunately, not every festival sells out in a couple of minutes, so I wanted to come up with something whereby they could arrange cancellation cover as early as possible, without having to pay the full premium immediately, which can be substantial,” explains John Silcock, group head of global entertainment Meridian Risk Solutions, which acquired LMP last year.

Under the terms of the payment plan, the festival pays 20% of the premium upfront, a further 30% 60 days from the event and the remaining 50% balance 30 days before, “by which time, hopefully their cash flow is such that it becomes much more affordable”. The product is being offered on a first come, first served basis.

“You have to keep coming up with new solutions because it’s a constantly evolving business and you have to provide financial solutions for that business and the risk management that goes with it,” adds Silcock. “We live in a world where extreme things are starting to happen with more regularity because it is so unpredictable now. If you look at the natural disasters happening across the world, whether it’s fires, earthquakes, floods, rain, storms, volcanoes, whatever it happens to be – any of these can have an effect on a festival.”

“Policies have to adapt to be effective in the ever-changing environment we operate in”

Silcock flags up other potential areas of concern for the business such as terrorism (“If the threat looks credible and the information from the security services is that you shouldn’t go ahead with this, then you can’t”).

Elsewhere, Steven Howell of Media & Music Insurance Brokers says that policies and coverages have been developed to cater for disruption caused by political unrest and civil commotion.

“Policies have to adapt to be effective in the ever-changing environment we operate in,” he tells IQ. “One of the biggest risks faced by promoters is non-appearance of headline artists or cancellation of the show. There are many reasons a loss can occur, such as artists’ ill health or adverse weather, but increasingly these risks include riots and civil commotion, national mourning and single (active) shooter.

Howell explains that other insurances to be considered include public liability, cyber, hired in equipment and artist travel insurance, while MMIB has also recently begun providing songwriters indemnity insurance, which provides cover in the event of copyright infringement claims.

The most important thing, he adds, is to ensure the cover is fit for purpose and that it will respond in the event of a claim – which is not necessarily the cheapest option.

“Cutting costs on the premium usually means reducing the cover in some way which is not always the best thing to do,” he says. “For example, insuring the cost budget rather than the revenue will usually be cheaper, but in the event of a claim this reduces the amount paid out and removes any element of profit from a claim – effectively meaning the promoter will have worked for free, and therefore is not the best solution in the long run.”

“Don’t view insurance as being a necessary evil, view it as being part of your planning for a successful event”

He continues: “It is really important to declare all prior commitments and any pre-existing medical conditions to your broker and insurers,” continues Howell. “Not doing so can significantly jeopardise the potential for a claim settlement. The more information provided, the better the options we can provide, and the more comprehensive the coverage will be. It is best for everyone that there are no hidden surprises in the event of a claim.”

Goebbels advises that the mental health of performers is “very much on everyone’s agenda” and needs to be properly addressed at the time of taking insurance. He goes on to guard against viewing insurance as “an enemy”.

“If it’s right, it can work well for you,” he says. “Apart from liability insurance, nothing else is compulsory. So get a broker involved and assess your own risk. And definitely don’t hold back on any details that a broker would ask for – because that only would cause complications in the event of a claim.”

“Don’t view insurance as being a necessary evil, view it as being part of your planning for a successful event,” concludes Silcock. “We can help you to construct the right insurance for you, taking into account your budget, and ultimately provide you with something which might help you sleep a bit better at night. And if your worst nightmares do come true, we’ll be there 24/7 to help.”

• IQ recently explored the cancellation insurance dilemma facing the increasing number of artists still touring well into their golden years.

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