Storms Ahead

18 January 2010

by Lars Brandle

When the forces of nature lashed the Pyramid Rock Festival on New Year’s Eve, the repercussions rumbled on well into 2010. An electrical storm tore through the Phillip Island site, rendering the main stage unsafe and forcing the cancellation of the four main headliners – which included four-time ARIA winners Empire of the Sun. Fierce winds of up to 100kpm were apparently recorded on the grounds. The decision to pull the plug saved lives and limb.

“This was an extreme situation that presented many risks including possible fatalities, which thankfully didn’t eventuate,” notes Shiny Entertainment, organizers of the sold-out multi-day fest. Apologies weren’t enough for hundreds of disappointed attendees, who took to the Internet to vent their spleens. And none received any cash back for the soggy finale. For Shiny Entertainment, it remains to be seen if the bad weather will rain on their 2010 parade.

One thing is for certain - Pyramid won’t be the last outdoor music event smashed by harsh conditions. Experts say wild weather is crashing headlong into the business of staging outdoor music events, with health and safety issues and event insurance coming under microscope like never before. Insurance companies admit “freak” weather conditions are here to stay.

“More and more promoters are asking about insurance, absolutely. It’s a major issue if you’re doing outdoor events,” says Colin Dawson, Adelaide-based manager of the speciality services group for international insurance brokers Marsh. “With the global financial crisis, some of backers are saying, ‘how are we protected?’ And some of the ticketing agencies are asking the promoters to provide evidence of cancellation insurance, otherwise how would the ticketing agency get their money back.”

The whole combination of things is coming to an apex,” notes Dawson. “You have the weather conditions, increased awareness of safety, looking after the crowd, and there’s a propensity for the Australian public to sue.”

In recent years, severe storms have punished Europe’s festivals business, forcing a spate of cancellations and incidents. Even deaths. The worst affected shows have included Germany’s Southside Festival, which in 2007 suffered a fatality when gales struck, while Italy’s Heineken Jammin’ Festival was nixed in similarly harsh conditions. Glastonbury Festival is a notorious mud-fest, a factor which has put a dampener on spirits and is forcing festival goers to look for sunnier climes, such as Spain’s Benicassim Festival.

“A lot of promoters over the years have chosen not to insure because they’ve never really had a problem. But what we’ve seen of late has been a real awakening for many of them,” explains Bob Taylor, co-founder of UK based insurance brokers Robertson Taylor.

Taylor’s firm has worked with many of Europe’s biggest open-air shows this year, including Aerosmith in Hyde Park, and Glastonbury Festival and the Live Earth concert at Wembley Stadium in July 2007. The London-based insurance veteran sees premiums rising in the years to come, although Australian insurers don’t all agree. “The insurers will review their positions and they will take a longer look at the long-distance weather forecasts,” notes Taylor. “Not that it tells us anything these days.”

It’s not just in Europe where the punters and promoters are ducking for cover. On the other side of the Tasman, the forces of nature conspired against the B-52s, whose Wellington winery date last December was cancelled. Persistent strong winds made conditions unsafe for the concert to go ahead, explained organizers Roundhouse Entertainment. Closer to home, the devastating Victorian bushfires last year forced the cancellation of Simply Red’s February 8th date at Rochford Wines in the Yarra Valley. The same catastrophe threatened Leonard Cohen’s winery dates in the region.

“It’s a terrible stress (dealing with the elements),” says Roundhouse Entertainment director Michael Newton, whose Melbourne-based company produces the A Day On The Green winery concerts. “We lost a Mellencamp and Crow show in the Yarra Valley to a fierce, wet and windy Melbourne winter’s day in November 2008,” the promoter notes. “But we’ve only lost three out of our first 150 shows. I would have taken that if you’d told me.”

Melvin Benn, managing director of London-based promoter and events organizer Festivals Republic, comprehensively insures all his company’s events, which include Reading and Leeds Festivals and Latitude. “Flash flooding is something that potentially will be with us forever,” he notes. “Big event insurance is no different to any other insurance. The more claims you have, the bigger the premiums go.” The music industry, however, is “still quite small in terms of the claims that it makes.”

The icy weather which is currently putting the freeze on sporting events on the Continent and the UK is another harsh reminder of nature’s power. During what has been described as the worst British winter in 30 years, the Football Association was forced in early January to postpone three-quarters of its Premiership football match itinerary. Snowfall is unlikely to wreck the Australian open-air music circuit, but there are some parallels. Australian sports officials and music promoters are finding the heat a major point of concern for their audiences, and it’s an issue health and safety officers are looking at carefully.

Severe fines and penalties for breaches of the law are in place should the health of patrons be overlooked. “The police and medical officers can call off the show if it gets too hot,” says Dawson. “It’s no longer just the promoter’s province.” In most parts of the world, rain is the most common enemy of open-air concerts, particularly for those which use a temporary stage. Lightening strikes can threaten electronic equipment and, obviously, the audience.

The bushfire season has arrived Down Under, and it too can play havoc with a show, even from a great distance. “Bushfires might knock out the power 200 kms away, but if you’re on the same grid you’re stuck,” says Dawson. James Chippendale, president of Dallas-based CSI Entertainment Insurance, says weather rates are not “trending up” because of global warming concerns. “That said, there are areas of the world that are drier or wetter because of global warming,” he says. “But there really is no rhyme or reason to it, so it’s still kind of a guessing game.”

Leaving the guess-work to the insurers is a no-brainer, says Taylor. “It’s a relatively inexpensive insurance,” he says. “If you were talking a $500,000 festival, you could be talking 1.5%, so maybe seven or eight grand to cover it. Why would you not spend it and protect yourself? It doesn’t make a lot of sense.”

Promoters have several options for how they insure their show. Event organizers can insure against their loss of revenue, or the actual cost of staging the show. Typically, promoters go for public liability, cancellation and bad weather contingencies. Equipment insurance cover will be required for anything hired, and if the event is selling merchandise, product liability cover should be on the radar. Concert insurance is often revenue based. Or for a free, ticket-less event, the rate is based on estimated admissions.

It can also be based on expenses. Underinsuring an event is “absolutely a problem,” notes Dawson. “If you’re insuring the expenses of staging an event, and just say the cost is $1 million and you insure for $500,000, in the event that you have a claim be it partial or total, you will get 50% of your claim paid.” That might be a big enough hit to sink the ship.