As musicians prepare for a star-studded summer of live events, the demand for performances is huge. At the same time, entertainment carriers are adjusting their appetites and underwriting parameters.
Catastrophic losses at music festivals and concerts have led to more thorough and stringent underwriting reviews. Because of restricted underwriting and overall capacity, umbrella/excess coverage has steadily increased the premium minimums they charge per million of coverage. In prior years, it would cost approximately $1,000 – $1,500 per million but in this new landscape, it is not uncommon to see the first layers of excess in the $4,000 – $7,500 range depending on the risk.
“What we’re starting to see right now, is a lot of carriers that were playing in this space for live events and for festivals and touring bands themselves — a lot of those carriers have pulled back in the space,” said Keli Tomack, managing principal at EPIC Insurance Brokers & Consultants.
Recent History of Live Events and Markets
According to an Insurance Journal story published in May 2022, Piecing Together Coverage in Live Events, conditions in the market “for mid-size and large events were extremely challenging before the pandemic began and with little to no event business for carriers to write and a slew of claims to pay, the market’s hardening” had accelerated.
In December 2022, Risk Strategies reported that the market’s reluctance to cover event liability, combined with outsized claims and skyrocketing defense costs, “has created a hard market with increasing premiums, stringent and rigid underwriting, and reduced capacity.”
Risk Strategies pointed to the risk of talent contracting COVID-19, adverse weather events, mass casualty events and social inflation as market drivers. At the same time, however, live music events are rebounding from widespread cancellations that shut down the industry three years ago.
Concert management group Live Nation reported record earnings in both 2021 and 2022. Last year, the group hosted 44,000 events that drew in more than 121 million attendees. Attendance increased 24% from 2019 — even though many international markets had yet to reopen.
“That demand shows no signs of slowing,” Live Nation wrote in its 2022 annual report. “In 2023, we have an even broader pipeline of artists touring more locations and playing more shows. And fans continue to prioritize live events over other discretionary activities and increase their on-site spend as they enhance their experience.”
Pollstar reports confirm that stadium and amphitheater attendance boomed last year, and ticket revenue at the top 200 clubs saw a 5% boost. Arenas didn’t fare as well, though, with grosses at the top 200 arenas down 1% from 2019.
“We’ve heard throughout the year of an uneven recovery, especially at the mid-size venue levels,” Pollstar noted in a 2022 year-end report. “With the perfect storm of inflation, labor shortages, supply chain, gas prices and a glut of tours, many venues — and artists — are still very much struggling to make ends meet.”
Where We Are Today
EPIC’s Tomack has worked in the entertainment marketplace for decades. The number of carriers has always been limited, and markets that want to handle certain things like equipment rental houses, film production and touring bands are “still somewhat intact,” she said.
“But in the live event space, those markets are rapidly tightening their underwriting requirements,” Tomack continued. “And in a lot of cases, we’re down to like just one or two markets that will handle any of those large camping events.”
Still, the demand is there — and has even increased in the past year, according to Tomack. And she thinks “we’ll see a few more people throw their hat in the ring.” Historically, she said, any time premiums rise in the space another player enters.
“So far, we don’t really get totally declined too often on risks,” Tomack said, adding that today, coverage can still be placed in almost all cases thanks to non-admitted carriers that operate in the entertainment space.
The most common claims in EPIC’s book of live music insurance are equipment related, such as lost and damaged equipment. Auto claims related to rental cars are common, too, and from a liability standpoint, the largest amount of claims stems from a concert staple — tossed objects.
“Any time something leaves the stage and is thrown into the crowd, one of two things can happen,” Tomack said. “One: It can hit someone and that’s a claim. Or two, everybody wants to get that particular item, and some scuffles ensue, and people get hurt.”
Or: Artists may toss themselves off the stage and prompt large claims.
Tomack said event cancellation and non-appearance coverage is important for artists, promoters and producers alike. She has seen “a very large uptick in this over the past couple years,” she said, pointing to travel delays, weather incidents and
non-COVID-19 illnesses as exposures that might present problems.
“This non-appearance coverage is something that is just becoming so dominant in the space,” she said, adding that, “when these promoters are putting up large sums of money for artists, a lot of them are requiring this coverage now to protect the advances. Almost like a bond, if you will.”
Cancellation coverage can safeguard more than in-person events. It can cover virtual music events, too, in the event of transmission and broadcast failure, for instance.
Advice to Brokers
To succeed in this niche space, Tomack believes brokers must set up their practice in a way that makes them a true risk management partner with their clients.
“Brokers really have to do their homework to get these things covered,” Tomack said. “They have to do a deep dive into the risk management practice of these clients,” she said. They have to do a deep dive into the risk transfer that’s happening inside of the contracts.”
When pyrotechnics, aerial dancers and special effects are used at these events, ensuring those risks are transferred properly is key.
In the case of a drone show, for example, brokers need to make sure not only that coverage does not have a drone show exclusion — but also that the drone show provider has appropriate limits based on the level of their show and named the contracting party as additional insured.
Carriers prefer to see waivers of subrogation in their favor, too.
“There’s always some new idea of what we can do to make the show more unique and more spectacular than the show before it,” Tomack said. “And the key to all of it is … knowing the roles of each party inside of the event or the performance and knowing what your clients are getting themselves into.”
She continued: “And then just being a good partner in helping them get through the assessment of what potential exposure they’re bringing to themselves by making these decisions to put on these great shows.”