(Reuters) – Insurers face millions of dollars in claims after a botched attack forced the cancellation of three Taylor Swift concerts in Austria, two people close to the Taylor Swift tour’s insurance told Reuters. However, several providers will cover the losses.
Concerts in Vienna were cancelled this week after a planned attack at the Ernst Happel stadium. Around 195,000 “Swifties” were expected to attend, many of them travelling from abroad to see the pop superstar.
Concert organisers Barracuda Music said all tickets would be refunded within 10 days. They could not immediately be reached for comment about insurance arrangements.
Ms Swift is popular with insurers because she rarely cancels concerts, a third insurance source said. Her fame and success mean most specialist event cancellation insurers in London will be involved in covering her tour, one source said. The sources declined to be named, citing client confidentiality.
Organisers of large sporting and entertainment events typically purchase event cancellation insurance, most of which is managed by a consortium of insurers through the Lloyd’s of London market.
A Lloyd’s of London spokesperson confirmed that event cancellation insurance is offered at Lloyd’s, but said they could not comment on specific policies.
Terrorist attacks are often excluded from event cancellation policies, but policyholders usually buy additional cover against them, or the threat of them. “A standalone terrorism cancellation insurance policy will have been triggered by a terrorist act or threat clause within the policy, because a known potential terrorist event has occurred,” said Tim Thornhill, managing director at broker Tyser.
Reuters could not determine the extent of cover on the concerts. Marcos Alvarez, managing director of global financial institution ratings at Morningstar DBRS, said losses from cancellations could run into hundreds of millions of dollars.
Mr. Alvarez said rescheduling the concerts is likely to limit insurance losses.
Based on his analysis, Andrew Colcombe, head of syndicate research at Argenta Private Capital, said the cover was designed in such a way that insurers would not suffer any losses even if a tour was completely cancelled.
Ms. Swift’s Eras tour is estimated to have grossed about $2 billion in ticket sales.
Event cancellation insurance usually covers delays, moving the event to another location, venue rental, artist salaries, and tickets as well.
Industry sources say these policies can be taken out by local or international organisers, and artists can add their own policies to ensure they get paid if the event is cancelled. Stadiums also typically have event cancellation insurance, said Loretta Worters, vice president of media relations at the US Insurance Information Institute.
“Assuming this is an isolated incident, we believe most insurers will be comfortable with their exposure to cancellation insurance products,” Mr. Alvarez said.
He added, “Given the increasing political tensions around the world, insurance companies may restrict the coverage available for cancellation insurance due to terrorism.”
Lee Ann Rossi, senior vice president of the sports and entertainment group at broker NFP Corp., also said she doesn’t think “this one-time concert claim will change the market.”
However, he added that “if this becomes a pattern or something happens at the Paris Olympics, it could have an impact on the market.”
British police said on Thursday that there was no indication that the planned attack would have any impact on Ms. Swift’s return to Wembley Stadium in London next week, where she will head for her final five shows in Europe.
Rich Phillips, head of crisis, resilience and reputation consulting at insurer Marsh LLC, said any extra security for concerts would “create a huge challenge” for police, especially as officers are on high alert after several days of rioting following racist attacks targeting Muslims and immigrants in Britain.
