The Last Word
Live Entertainment Returns but With Some Big Insurance Changes Due to COVID-19
Insurers are having to adapt to changes created by the pandemic, including the addition of communicable disease limitations to policies.
- Lori Chordas
- October 2021
Last year, the live entertainment world came to a screeching halt as COVID-19 forced the cancellation of thousands of concerts, festivals and trade shows and dimmed the lights on everything from Broadway to regional theaters. The pandemic also created some big changes for insurers providing coverage to that market, including ushering in the need for communicable disease limitations and making insureds' COVID protocols a new part of the underwriting process.
Over the past 19 months, insurers in the live entertainment market have been hit by some fairly large losses, particularly in event cancellation coverage, even though the losses pale in comparison to those in other areas of the entertainment industry.
Scott Carroll, executive vice president and program director at commercial insurance broker Take1 Insurance, said the losses were large enough to reduce capacity, increase premiums and force some carriers to retrench in certain entertainment segments such as festivals.
Now that's forcing some policyholders to reevaluate where they will place those risks, with some looking to captives or self-insurance as an option, said Sarah Cronin, a partner at Venable LLP's entertainment and insurance practice in Los Angeles and a member of the Media Law Resource Center's insurance group.
Since the start of the pandemic, carriers insuring live events have been busy altering policy language and adding communicable disease exclusions. Prior to COVID-19, communicable disease-related losses were available in some event cancellation policies, but Carroll said that's no longer the case.
New and rising risks created by the pandemic also are driving some changes for underwriters who, Carroll said, are now asking more questions than ever before when evaluating and pricing those potential exposures. He said many of those answers lie in insureds' very detailed COVID protocols that they've created in recent months.
Among some of the safety measures event organizers have included in those protocols are mask and/or vaccination mandates, assigned entry times and the limitations of event capacity.
In recent months, many live events have returned to the stage, while others continue online or have moved to a more hybrid model. Carroll expects the latter could increase the need for professional liability and cyber-type policies to cover errors and omissions or other losses caused if something goes awry during the live streaming of those events.
Still, as the reopening of live events creates the long-awaited sigh of relief that event organizers and owners have been waiting for, they now face yet another crossroad. Surging case rates from the delta variant and lagging vaccine adoption are sounding the alarm bells for insurers and their insureds. “We're not yet sure how that will fare for those in the live entertainment industry,” Venable's Cronin said, “but we are now seeing some event organizers weighing their decisions about additional cancellations, and delta is also giving people pause for what the next variant could hold.”
Barring big changes created by the newest variant, Carroll said the live entertainment industry, which generates around $1 trillion in annual revenue, is well poised for growth as events “return with a vengeance.” But while that's expected to drive a spike in insurance sales, Carroll said some insureds may be reluctant to commit to the same exposures they had pre-COVID.