Cancellation Culture
IN EARLY SEPTEMBER 2022, organizers of the
Harvest Moon festival in Miramar, Fla., were forced to cancel their three-day country music event for an unusual reason: They could not find affordable cancellation insurance for the festival, which was scheduled to take place Oct. 27-29 — little more than a month away.
Executives with destination-festival producer Topeka thought they had a policy in place when they announced Harvest Moon — which was to feature headliners Eric Church and the Turnpike Troubadours — and had no problem getting coverage in the past. The festival fell outside the official hurricane season, but approximately six weeks before the event, weather forecasts indicated that Miramar could be in the path of two developing superstorms. As a result, sources close to the festival tell Billboard that Harvest Moon promoters were suddenly being quoted prohibitively high prices that led to the decision to scrap the event and refund buyers, despite being 70% sold.
While these circumstances are rare, the incident underscores how the liabilities posed by inclement weather and climate change have significantly increased financial risk for independent promoters.
“The event business used to be much more competitive, which meant much lower prices for the policyholders,” says Peter Tempkins, who recently retired from risk management and event insurance firm Hub International. But a substantial increase in the number of festivals taking place yearly in North America, coupled with an increase in adverse weather, has caused event cancellation insurance premiums to triple and deductibles to balloon in recent years.
For much of the last decade, event cancellation insurance enabled promoters to insure their expenses and forecast profits for about 80 cents per $100. So, for example, a promoter that booked an artist for $500,000 could purchase a $4,000 policy covering that expense in the event of an adverse weather cancellation.
But policy prices have risen exponentially now that “insurance companies are increasingly relying on historic data about regional weather patterns and spending more time trying to identify the statistical risk based on location and time of year,” says Paul Bassman, a broker with Dallas event coverage firm Higginbotham.
Tim Epstein, an attorney for independent festivals in North America, says rising premium costs are first felt by indie promoters and organizers, but even Live Nation and AEG have begun requiring some touring acts to carry their own cancellation policies and are reducing their obligations to cover artist payments if adverse weather forces the cancellation of an event.
Tempkins predicts that eventually, insurance companies “either won’t cover events in certain regions, or they’ll simply stipulate that the policy won’t cover cancellations due to rain or adverse weather conditions.”
“I’m already seeing artists and agencies ask far more detailed questions about my clients’ coverage than in the past,” Epstein says. “People are becoming more cognizant of the risks they face from weather.”