As COVID-19 restrictions continue to ease and large social events and in-person gatherings return, event organizers face a new normal that’s anything but normal. From new health and safety measures, and a widespread labor shortage, to increased costs brought on by inflation, the challenges are widespread and higher insurance costs associated add another hurdle for entertainers, event organizers, and hosts in a post-pandemic world.
Road to a Hard Market
Historically, insuring live events has been a niche specialty business, represented by a small number of carriers and accounting for only a small fraction of participating insurance providers’ revenue. In recent years, due to some profound exposure challenges, the market has undergone some dramatic changes, creating a reluctance to cover event liability. That hesitancy, and some outsized claims and skyrocketing defense costs, has created a hard market with increasing premiums, stringent and rigid underwriting, and reduced capacity. Here’s a look at some of the market drivers:
Talent Contracting COVID-19
COVID-19 cases continue to cause live event cancellations. In the last few months, major acts like Car Seat Headrest, Graham Nash, and Ringo Starr have all canceled shows after contracting COVID-19. Event organizers cannot file claims in these instances—non-appearance event cancellation policies typically exclude coverage for cancellations related to COVID-19 and communicable diseases. However, the virus is still a contributor to the rising cost of event cancellation insurance policies, as previous pandemic-related claims payouts have affected overall carrier profitability.
Adverse Weather Events
For many years, insurers have written for events based on long-term climate models. Climate change has made those models less reliable. With extreme weather events occurring at an increasing rate, adversely affecting events and triggering major claims due to cancellations, it is more difficult and expensive for events to secure adverse weather insurance. Recently, the Harvest Moon country music festival in Miramar Beach, Florida was canceled when the festival’s host was unable to attain adverse weather insurance for the event.
Mass Casualty Events
Tragedies like the senseless mass shooting that took 60 lives at the Route 91 Harvest country music festival in Las Vegas also contribute to increasing event insurance premiums. Mitigating the risk of an active shooter has become crucial to securing and retaining certain kinds of event insurance.
Even without a violent threat, there can still be a risk of bodily harm. For instance, a crowd crush resulted in 10 people’s death at the 2021 Astroworld Festival. The festival was insured, but a lawsuit filed on behalf of Astroworld attendees has brought questions about the adequacy of the policy’s limits. Seeing the potential for this type of disaster has made some insurance providers especially wary, and all insurers are looking much more closely at proposed event operations.
Social Inflation
Lawsuits are more common and costly because of a growing cultural demand for accountability. The dramatic increase in litigation, costs, and jury awards has directly affected claim payouts, loss ratios, and coverage pricing for the entertainment businesses.
The live entertainment industry may be facing mounting challenges, but live events are not going anywhere. Some sources indicate that demand for live entertainment is at an “unprecedented level” with the slackening of COVID restrictions.
Event production in the new normal calls for thoughtful risk mitigation and a smarter approach to your insurance safety net. Consultative brokers can offer specialized coverage solutions tailored to the unique needs of hosting an event. Preparing far in advance with a detailed plan of action that outlines the necessary procedures set in place for any and every potential outcome will ease the minds of underwriters during the renewal process.
Want to learn more?
Connect with the Risk Strategies entertainment team at entertainment@risk‐strategies.com