The show must go on is the old saying, but any experienced event planner will tell you that’s not always possible. There are too many factors that are out of their hands: issues with performers, inclement weather and, increasingly, potential disruptions from riotous crowds, protestors and even potential terror acts or threats.
It’s a lot to manage, and any one of these disruptions can quickly turn what looked like a profitable event into one that causes organizers to lose more than just a little sleep. Handling all of these contingencies independently is extremely difficult, and more event planners and organizers are now using insurance protection to manage their risks and limit their potential downside.
|Sorry, this event has been canceled
Any big event, like the Olympics, a major league baseball game or a Rolling Stones concert, is going to be covered by insurance to recoup losses if the event needs to be cancelled or abandoned. The bigger the event the more coverage the organizers want to buy, with coverage limits in the billions of dollars for large international competitions that have increasingly expensive television rights contracts. This coverage is necessary because you can’t control the weather or having a performer gets sick or injured before the event, and it’s not always possible to reschedule to an alternate date.
Event cancellation coverage is also now being purchased for smaller and more local events like county fairs, symphony orchestra concerts, minor league baseball games and many others that carry major financial risks for the organizers if they are canceled or abandoned. Even if the event can be rescheduled, there are additional costs incurred that insurance can help cover.
|A rainy day policy
Organizers can insure against a rainout, but the bigger concern is often the events that aren’t cancelled, but that experience bad weather. If it’s too wet, hot or cold fewer people are likely to attend, and even those that do will spend less time at the event, and less money on concessions. That is exactly what happened at this year’s Governor’s Ball, a music festival in New York City, where severe rain the Saturday night of the festival caused much of the crowd to leave early before the Sunday show was canceled entirely.
Weather insurance protecting against unseasonable conditions is in demand for industries that depend on good weather, like golf courses. These policies protect against a drop in revenues associated with weather that is too hot, cold or wet for golf and keeps people away from the course. Event organizers can also purchase coverage for a wide variety of events, with organizers receiving compensation for an agreed percentage of projected revenues once a specific trigger, say half an inch of rain over a four-hour period, is reached.
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A United States flag waves next to carnival rides as fireworks burst in the air during the Fourth of July Independence Day show at State Fair Meadowlands, July 3, 2012, in East Rutherford, N.J. (AP Photo/Julio Cortez)
|Threats — known and unknown
Threats far outside an event organizer’s control, and often unrelated to the event itself, can put event attendees at risk and cause a postponement or cancellation. The horrific terrorist attacks in France last year, including an attack outside a France vs. Germany soccer match, were a sad reminder that large events are an appealing target for terrorists.
Security has increased at events worldwide since these attacks and others that followed in the first half of 2016. Although many larger events regularly have insurance against terrorist attacks, other disruptions including protests, riots and the threat of an attack can also lead to event cancellations, but they aren’t always covered by insurance.
Event planners and law enforcement officials need to prioritize the safety of attendees and are likely to err on the side of caution, given the number of terrorist attacks worldwide over the past year. Many times the decision is out of the event organizer’s hands entirely, and law enforcement directs the organizer to cancel or abandon an event.
Earlier this summer, The Band Perry had to cancel a planned Delaware concert after the venue received what was deemed to be a credible threat of terrorism from a man planning to bring guns to the sold-out show. Organizers can protect themselves, and attendees, by purchasing coverage that will respond to a variety of potential disruptions and threats.
|Plan for the best, prepare for the worst
Event organizers work hard to maximize attendance and revenues at their events, but there are many things that are out of their control. Whether they encounter known potential problems like a rainy day, or unknown problems like protestors blocking the entrance to the venue, insurance is an important part of managing events for success.
Brokers and agents can help event organizers gain more certainty by creating risk management programs that address the full scope of the potential disruptions they may face.
Christian Philips is U.S. focus group leader, Contingency, for Beazley. He can be reached at [email protected].
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