Tag Archives: Contingency

Why music festivals are among the hardest risks to insure

Headed to a music festival this summer? It’s the insurance for these events, rather than the music, that is drawing the headlines.

From Bloomberg, via Claims Journal:

“Big events, those the caliber of Coachella and Bonnaroo, typically take on at least five kinds of insurance policies: cancellation, including terrorism coverage, general liability, umbrella policies, workers’ compensation, and business auto coverage.”

FiveThirtyEight asks: what’s the typical cost of cancellation insurance for a music festival? Bloomberg has the answer:

“Cancellation insurance will typically cost 1 percent to 1.5 percent of the overall cost of an event, as much as $150,000 for a $10 million festival.”

Unpredictable weather, the threat of terrorism, and the demographics of festival attendees, are some of the factors that make music festivals one of the hardest risks to insure.

From the Argo Global blog, a post by David Boyle, contingency class underwriter, offers this perspective on why: Without intervention, festivals are likely to disappear from insurers’ books:

“Festivals, which sometimes include dozens of acts, can’t often be rescheduled in the event of inclement weather unlike concerts or other live performances.”

And:

“Threats to festivals are not isolated to the increasingly unpredictable weather. Terrorism is now a very real threat to high profile events which often lack the security procedures of more permanent crowded places.”

Key takeaway:

“In our view, if the festival insurance market is to return to profitability, then intervention will have to come in the form of significantly increased pricing and, particularly for smaller events, improved risk mitigation processes.”