The New Insurance Realities of the Live Event Industry

The increasing frequency of live event structural failures and tragic incidents mandates that insurance agents now, more than ever, be knowledgeable about changes in insurance regulations and venue contractual requirements with vendors.

We are beginning to see these changes affect the most sublime public events, including the typical neighborhood street festival that has been taking place in towns for years. The high-profile stage collapses at the Indiana State Fair (August 2011) and the Radiohead concert in Ontario (June 2012); the scaffolding and rigging collapses outside a Linkin Park concert in Cape Town, South Africa (November 2012) and at ULTRA Music Festival in Miami (March 2013); and the tragic nightclub fires in Rhode Island in 2003 and Brazil in 2013 all serve as stark reminders that things can go terribly wrong.

As live entertainment events become increasingly more complex — elaborate in their staging and techno-centric — steps must be taken to ensure a higher level of event safety in every aspect of an event’s production.

As insurance professionals, we are already seeing greater scrutiny of safety practices by city and state inspection bureaus. Stricter construction codes are being discussed; more stringent onsite inspections are being implemented; and more venues are requiring a higher degree of insurance coverage through higher limits and broader policy language on event producers, their vendors, and insurance carriers.

Insurance Changes

Gone are the days when the insurance sections of venue contracts were glossed over and rarely enforced. We have entered a new age of intense oversight with stricter requirements. Municipalities want to be certain that they have taken every precaution to ensure the public’s safety, and they are putting a greater onus of responsibility on the shoulders of event producers and their insurance providers to show that they are ready for almost any contingency.

Instead of accepting certificate of insurance statements in lieu of contract endorsements as was often the norm in the past, venues are reexamining vendor contracts and strengthening the insurance language sections with more detailed requirements, including waivers of subrogation and per project aggregate language. Insurance providers for outdoor venue events are now asking to see engineering reports, high wind action plans, and daily operations plans as well.

As a result of these changes, it is critical for insurance agents to understand the magnitude of the exposures involved with venue-related businesses, and to offer coverage through a carrier that has experience in this specialized industry. Every party needs to understand its roles and responsibilities when it comes to the safety and security of the public at these events, and that includes scrutinizing, understanding, and enforcing the insurance aspects of the contracts between the venues and the vendors. Any situation where a large number of people congregate is now commanding more attention from regulators, and that trend is only going to accelerate.

New entities such as the Event Safety Alliance (www.eventsafetyalliance.org) have launched in the wake of the recent tragedies, and it is recommended for all insurance agents to become familiar with the measures these organizations are taking to self-police event safety. The Event Safety Alliance, for example, has published a “United States Event Safety Guide,” which should be mandatory reading for any live event producer.

Opportunities

With the increased scrutiny of producers’ and vendors’ insurance policies, many insureds will be searching for advice and direction from their insurance providers. Those agents and carriers who offer the most comprehensive policies and value-added services could see a swell of business. The most valuable insurance partners will be there to discuss potential claims with event clients before they happen.

The tragic events of the past two years, coupled with the persistent trend of unpredictable weather events, have forced the live entertainment industry to put safety first. Making certain every client has the right kind of insurance coverage that is responsive to contracts is a critical first step, followed by requiring that every customer has a viable event safety plan that is well-thought out and specific to its function and role at these public events.