Take1 Insurance’s Scott Carroll talks about why liability insurance is critical for those in the live event business.
The collapse of the temporary structure erected for the Indiana State Fair on Aug. 13, 2011 was the rigging and staging industry’s own 9/11. It has become the point on the timeline that divides, irreversibly, that professional community into sharply different eras of before and after. The tragedy, during an outdoor concert by the country band Sugarland in which a wind gust from an approaching severe thunderstorm hit the stage structure, causing it to collapse, killed seven people and injured 58 others.
It also resulted in a $50 million settlement, in 2014, after it was determined that the stage rigging and “Jersey Barrier” ballast system didn’t meet industry safety standards. The collapse also led to significant changes to industry and regulatory protocols. For instance, the state fair two years ago created two new positions — a chief operating officer and a director of safety and security — who are directly involved in safety matters.
But the Indianapolis tragedy and others, including The Station nightclub fire — the fourth-deadliest nightclub fire in U.S. history, killing 100 people in West Warwick, RI — also brought about a heightened level of awareness about the role of liability insurance as applied to live event production. At a time in the entertainment industry when the emphasis is shifting decidedly towards live, in-the-moment experiences and away from prerecorded media, those who participate in the production of live events need to take stock of an aspect of their economic lives that unfortunately still tends to be low on the list of priorities for some.
Event Still Ripples
“The Indiana State Fair incident is something whose implications are still rippling across the entire live-event industry,” observes Scott Carroll, executive vice president and program director of Take1 Insurance, a division of U.S. Risk Insurance Group that focuses on the entertainment industry and live events, including concerts and fairs. “At a time when the music industry is selling experiences instead of records, the impact of what happened in Indiana is incredibly significant.”
One of the outcomes of the Indiana State Fair incident is that liability insurance is being increasingly (and contractually) required by event promoters of any and all of their vendors, including staging, rigging, lighting, video/projection providers and sound companies. The venue owners must also carry their own liability coverage, as do the promoters/event producers. Although this creates significant overlaps of coverage — seemingly a waste of money — it isn’t, says Carroll, in the litigious environment surrounding live events since 2011.
“[Litigation] is always going to go after the deepest pockets, and it will go after every possible participant in an effort to find the deepest pockets,” he cautions. (A sizable portion of the settlement in the wake of The Station disaster, for example, was paid by a nationally known beer brand that had run a promotion the night of the fire there.) This overlap, though, is actually a beneficial phenomenon known as “cross indemnity,” which helps spread the burden of any liability across more insured entities. This, he continues, is already influencing the economic fortunes of those vendors. “For years, the entity that put on a local street fair may have used the same sound and lights and tent providers without a problem,” he says. “But in recent years, those same event producers are now demanding proof of liability insurance from all of their vendors, even the ones they may have been using for years without questioning that. The vendors who do not carry liability insurance, or who are underinsured, are the ones who are going to find that they’re not able to get these jobs anymore.”
Insufficient liability insurance is its own kind of danger, one that can lead to a false sense of security. In the event of a calamity, being underinsured can mean the service provider can be liable for the uninsured value of any adverse outcome.
Carroll counsels that anyone in any commercial enterprise seeking liability coverage should look for brokers that both clearly understand the requirements of their particular fields and have access to insurance carriers that have experience with their types of work. That goes in spades for live event production, which tends to need a wide range of vendors — a typical major corporate product-introduction event will need a venue, lights, sound, video, rigging, staging, music, catering, security and personnel to handle all those tasks and more. In fact, he says, the most valuable insurance partners will be ones who are able to discuss potential claims with event clients before they happen. “The best ones will be able to answer every question you have,” says Carroll, “starting with, ‘Why is this insurance company you’re recommending the best one for my situation?’”
Costs
Typical general-liability insurance limits are $1 million per occurrence, $2 million aggregate. This is standard across most industries, though some insurance carriers will allow an insured to purchase higher single and aggregate limits. Others require the insured to purchase an umbrella policy, which is defined as that which is in excess of specified other policies and also potentially primary insurance for losses not covered by the other policies. Carroll says umbrella policies are often a bargain, once primary insurance is in place. “I don’t think anyone in the live entertainment space should be walking around with less than the 1 million/$2 million combination, plus a $5 million umbrella,” he says.
Premium costs are a legitimate concern, and they’re being driven up by a number of factors, not the least of which is that, as more events take place outdoors — one list (plsn.me/FestTally) counted 847 outdoor music festivals in North America last year alone — the industry as a whole becomes more vulnerable to increasingly volatile weather. Every year, as the risk-underwriting industry watches growth in the live event sector, there are more insurance companies entering this arena, offering customers more choices. That market-based dynamic should also tend to reduce prices, thanks to competition. However, while Carroll says that will likely be the case in the near future, currently premium costs are still trending slightly higher or are leveling off. In the future, certifications of safety training from trade organizations such as the Event Safety Alliance (ESA) could help reduce premium costs. That’s a practice the auto insurance industry has been implementing in recent years — take a defensive-driving course, get a discount; go five years without an accident, get a discount.
“I believe that carriers will start rewarding customers that are seen to be acting responsibly regarding safety at live events, and organizations like PLASA can steer their members towards those carriers,” he says. “I’m actually working on exactly that with my carriers now.”
But there remains a pernicious sentiment among a not-unsubstantial slice of the live-event services vendor community, particularly in smaller markets, that they can forgo liability insurance. That, says Carroll, is the single biggest mistake they can make. “You might view insurance as a costly burden, but the costs of not being insured when disaster strikes are far higher,” he says. “You’d never cut corners on your equipment; you’d never send your crew out in a truck with bald tires. Operating without liability insurance is the same thing. You only need to look at those who’ve been found liable for tragedies in the past to see just how expensive that can be.”
For more details on Take1, visit www.take1insurance.com.
