Event cancellation Insurance will cover any expenses or lost revenue that an event promoter might stand to lose if the event they are holding or attending is cancelled, abandoned or postponed for unforeseeable reasons beyond their control.
Types of events that may be covered
- Sporting events and competitions
- Trade shows, conferences and lectures
- Festivals and fairs
- Film, television and premiers
- Concert tours
- Corporate functions and community events
- Weddings and other special family gatherings
The type of incidents that could endanger an event
- Inclement weather
- Natural catastrophes, such as earthquake, flood and fire
- Structure damage
- Utilities failure
- Strike risks
- Terrorism or threat of terrorism
- The inability of speakers, performers, teams or exhibitors to appear
- National Mourning – sometimes excluded
- Communicable disease – sometimes excluded
In certain circumstances and when dealing with some insurance companies, there may be exclusions:
- Actual or threatened use of Biological/Chemical weapons
- Losses attributed to or arising from Severe Acute Respiratory Syndrome.
- Lack of sales, response or reduced attendance
- Variations in exchange rates or currency stability
- War and therefore civil commotion
- Losses resulting from National Mourning
- Financial Failure, insolvency or default, support or Withdrawal of support by any party
- Acts of Terrorism – a policy can be extended to include this cover.
Examples of possible major impacts:
National Concert Tour
The terrorist act of 9/11 resulted in the event cancellation of 1000s of functions including national touring groups. The tour postponed 4 concerts but was able to make them up one month later.
These days with everyone downloading music, recording artists are having to tour more often to recoup losses. They therefore have the high expense and risks associated with touring.
The reality of today’s music industry is that many recording artists have a very short window for top earnings, but when they tour, they are incredibly productive. As a result, non-appearance coverage has become more popular, especially when a big act goes out on the road. To make sure they are covered, the artist’s management has to figure out the potential income from tour guarantees plus percentages put up by the promoters. They then factor in what the loss would be if the artist failed to complete all or part of the tour.
According to Pollstar, in 2012 the top 50 tours alone brought in a combined $3 billion. Factors taken into account when assessing the risk is the artist’s prior non-appearance record. In addition the tour schedule and where the artist is in their career financially. There are however many aging rock stars (many over 50) touring these days. Furthermore, the decades of screaming and back-stage indiscretions take their toll. This increases the chances of tour cancellation due to health problems. Vocal hemorrhaging, vocal cord infections and inflammation.
Dr. Joseph Sugarman, one of the country’s leading ear, nose and throat specialists has assisted many recording artists over the years and says that the most common throat problems stem from upper respiratory infections, which cause the vocal cords to swell. The fact is that performing with swollen vocal cords compounds the dangers.
Singers are at high risk as every time they use their vocal cords to sing or speak, one vocal cord vibrates against another. The louder the voice is used, the more violent the collisions. The higher the pitch, the more frequent the collisions. Dr. Lee Akst, a laryngologist of the John Hopkins Voice Centre in Baltimore, explained that recording artists constantly on tour are at high risk to develop vocal cord problems.
Other physical problems can result in event cancellations and non-appearance. According to Billboard, Lady Gaga, during her 2014 “This Way Ball” concert injured her hip resulting in the subsequent refund of tickets worth about $25 million.
A stadium tour like Lady Gaga’s employ well over 100 crew members. They require local support staff and involves top-level partners like promoter Live Nation, which pays staggering upfront costs that it hopes to recoup over the course of the tour. So what happens when the show cannot go on?
Travel delays may cause a major problem for touring recording artists. During Madonna’s 2008-2009 “Sticky and Sweet” tour, she was traveling from Europe to the United States to South America with her four 747s full of cargo. One of the planes was n’t cleared for flight from Mexico City to Buenos Aires and the show had to be postponed.
Physicians’ Group Annual Convention
Buying event cancellation insurance based on 100% of their gross profit potential also guarantees them continued year-round operations in the event of an interruption or cancellation of their event.
Film Production Company
Filming outdoor scenes in the Northeastern US in late April is chancy. In addition, spring ice and snow storms can bring the production to a halt. By ensuring the entire budget with event cancellation the production company is thus able to ensure against bad weather and cast non-appearance.
Circles Group expects demand for film insurance packages to increase in the next five years, as film budgets in Asia are increasing and co-productions with western producers. Foreign investors are increasing. This will drive demand for more sophisticated event insurance products which are tailored to local needs.
Major Golf Tournament
Faced with paying appearance fees to certain high profile players, the tournament organizers therefore want to make certain, in the event of cancellation, they are thus reimbursed their fees. Concerned only in insuring their out of pocket expenses, they may also elect to buy a policy based on expenses only, not gross receipts, thereby significantly reducing the premium charged for the policy.