Insurance companies are facing millions of dollars in claims after reports of an attack forced American singer Taylor Swift to cancel three concerts in Austria, although several insurance providers will share the compensation, according to the two people involved in insuring Swift’s trip told Reuters.
Concerts in Vienna were canceled this week after it emerged that an attack was planned on the Ernst Happel stadium. Around 195,000 people were expected to attend, with many coming from outside Austria for the chance to see the pop star.
Barracuda Music, which is organizing the concert, said all tickets will be refunded within 10 days.
A third insurance source said insurance companies like Swift because she rarely cancels her concerts. One source said that her fame and success meant that most of the insurance companies that specialized in canceling concerts in London would be involved in covering her tour.
Eliminate terrorism insurance
Organizers of large sporting and entertainment events typically purchase event cancellation insurance, much of which tends to be insured through Lloyd’s of London Marketplace ( SOLYD.UL ) with a consortium of insurers.
A spokesman for Lloyd’s of London confirmed that event cancellation insurance is offered at Lloyd’s, but said he could not comment on specific policies.
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Armed attacks are often excluded from event cancellation policies, but policyholders usually purchase additional cover against them, or the risk. Managing director at brokerage Tycers, Tim Thorn Hill, said the stand-alone anti-terrorism insurance policy was triggered under the Terrorism Act, “where there was a known terrorist incident”.
Marcos Alvarez, Managing Director of Global Financial Institution Ratings at Morningstar DBRS, said losses due to cancellations could reach tens of millions of dollars.
Alvarez said insurance losses would likely be limited because concerts could be rescheduled.
The head of syndicate research at Argenta Private Capital, Andrew Colcombe, said that based on his analysis, the insurance cover was structured so that insurers would not be responsible for canceling the tour completely.
Swift’s “Iraas” tour is expected to generate nearly $2 billion in ticket sales.
A single crash will not affect the market
Event cancellation insurance usually also covers delays, moving the event, venue hire, artist fees and tickets.
Local or international organizers can get policies, and artists can add their own to ensure they get paid for the event if it’s canceled, according to industry sources. The stadium usually has event cancellation insurance, said Loretta Worters, vice president of media relations at the Insurance Information Institute.
“Because this is an isolated event, we believe that most insurers will remain comfortable with their exposure to cancellation insurance products,” Alvarez said.
He added that in the future, “insurance companies may limit the coverage available for anti-terrorism insurance, as political tensions continue to grow around the world.”
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Lee Ann Rossi, senior vice president of the sports and entertainment group at brokerage NFP, said she doesn’t think “this one-time concert requirement (insurance) is going to change the market.” “
However, she said, “If this becomes a pattern or something happens in Paris during the Olympics, it could affect the market.
Cooperation between America and Austria to prevent threats
In another context, the White House said on Friday that the United States had exchanged information with the Austrian authorities to help stop the threats facing Taylor Swift in Vienna, according to Reuters.
White House national security spokesman John Kirby said: “We work closely with partners around the world to monitor and disrupt threats. As part of this work, the United States shared information with Austrian partners to prevent the threat facing Taylor Swift’s concerts there in Vienna.”
