Michael Jackson’s promoter
learned the hard way that sometimes fate overtakes events. Be
prepared in case it happens to your client.
He was the “King of Pop,” heading for a major
comeback—and then in a heartbeat, it was over. Michael
Jackson left behind mourning fans, devastated children, family
and friends in shock and the cancellation of 50 live concerts
at London’s O2 arena.
The exposure for an event of that magnitude is potentially
huge. All 20,000 seats for all 50 concerts were sold out. As a
result of Jackson’s death, the event promoter AEG Live
may be on the hook for a lot of money. Some of the exposures
AEG could face include ticket refunds, commitments to vendors
and wages for event employees, among others. In all, news
reports estimate losses up to $500 billion. Of that, $82
million was for tickets.
AEG has event coverage. How much and what it covers is only
speculation at this point. To get the insurance, Jackson had to
undergo a four-hour medical exam, which, according to the
promoter, he passed with “flying colors.”
The insurance could cover some of AEG’s losses, but it
may all hinge on how Jackson died. Rumor has it that the policy
covers drug overdoses (it’s the entertainment world after
all) but not death from natural causes. In any case,
considering the strange circumstances surrounding his death,
there’s likely a battle brewing between the insurers and
AEG over the claim.
Murphy’s Law dictates that anything that can go wrong
will go wrong. Most clients may not book big-time events, such
as 50-concert tours, but they probably hold annual conferences,
golf tournaments, fundraisers and the like. They may be the
bread and butter of the organization.
So what do you do?
It’s the day of the big event, an annual conference of
2,500 people. Hotels and speakers have been booked, caterers
hired and—long ago—contracts signed. The event
planners have nailed down everything to the smallest detail and
then the unexpected happens: A major storm rips through the
area and crashes the power grid. Power won’t be restored
for the three days the event is planned.
Now what? Got event insurance? This is where it kicks
A rule of thumb is that cancellation insurance covers perils
that are beyond the control of the planner. Depending on the
policy, event insurance can cover anything from a
“runaway bride” to interruption or cancellation
because of fire, hurricane, power outage, equipment loss,
airline strike, terrorism, illness and death. Usually policies
are written on a case-by-case basis, but they also can be
written to cover a tour or on an annual basis—covering
all scheduled events.
What it won’t cover is routine business problems, such
as low attendance because of poor planning or marketing or
simply lack of interest.
Whether it makes sense to buy cancellation insurance depends
on the cost and size of the event and its relative importance
to the organization’s finances. The cost depends on a
number of variable factors, such as where and when the event is
being held and the budget. Prices are higher in the winter than
in the spring, summer or fall. And if the event is planned for
the height of hurricane season in Miami or in an earthquake
zone, then expect higher premiums.
Also, expect to pay considerably more if the event is in an
area that is considered a high-risk terrorist target. Inside
the U.S., those targets include New York, Washington and Los
Angeles. Next on the list are national monuments and landmarks
and other major metropolitan areas, such as Chicago, Boston and