In early September 2022, organizers of the Harvest Moon festival in Miramar, Florida, were forced to cancel their three-day country music event for an unusual reason: They couldn't find affordable cancellation insurance for the festival, which was scheduled to take place on 27- October 29, just over a month away.
Executives with the Topeka destination festival producer thought they had a policy in place when they announced Harvest Moon — which will feature pioneers Eric Church and the Turnpike Troubadours — and have had no problem getting coverage in the past. the festival fell outside the official hurricane season. But about six weeks before the event, weather forecasts indicated that Miramar could be in the path of two developing superstorms. As a result, say sources close to the festival Advertising sign that Harvest Moon backers suddenly received prohibitively high prices leading to the decision to cancel the event and refund buyers, despite being 70% sold.
Although these circumstances are rare, the incident highlights how liabilities arising from severe weather and climate change have significantly increased the financial risk for independent operators.
The events business was much more competitive, which meant much lower prices for policyholders. But a significant increase in the number of festivals taking place each year in North America, combined with an increase in inclement weather, has caused event cancellation premiums to triple and sales to balloon in recent years.
For much of the last decade, event cancellation insurance allowed organizers to insure their expenses and anticipate profits for about 80 cents per $100. So, for example, a promoter who booked an artist for $500,000 could buy a $4,000 contract to cover that cost in the event of a bad weather cancellation.
But policy prices have risen exponentially now that “insurers are increasingly relying on historical data about local weather patterns and spending more time trying to determine statistical risk based on location and time of year,” he says. . Paul Busmanbroker with Dallas event coverage firm Higginbotham.
Tim Epstein, a lawyer for independent festivals in North America, says rising premium costs are being felt first by independent promoters and promoters. While Live Nation and AEG have begun reducing payouts for festivals that cancel 60 to 30 days in advance, prompting some artists to follow their own policies, indie promoters can't often set similar terms for their acts and, as as a result, “people are becoming more aware of the risks they face from weather conditions,” he says.
This story will appear in the March 30, 2024 issue Advertising sign.
