Sex and drugs and rock’n’roll insurance

As tours become longer, more spectacular and represent more of an artist’s income, music biz insiders reveal that on-the-road hedonism is dying out. Well, at least it keeps the premiums low

A day after Katy Perry tweeted she had just completed her 151-date Prismatic world tour and that it was “only By The Grace Of God that I made each & every one of them”, One Direction had to cancel their show in Belfast at the last minute due to Liam Payne falling ill.

Insurers and underwriters looking at Perry’s next tour will regard it as low risk. But they will be keeping a closer eye on One Direction, even though the show was quickly rescheduled, and mentally reworking the numbers if more shows get cancelled. Since record sales started to tumble 15 years ago, touring has become the way that most acts make a living these days. The numbers are staggering. Taylor Swift, for example, is grossing $2.93m per night on her 1989 tour, based on from figures published by Billboard. With stakes this high, touring insurance, on the surface an admittedly dry subject, has never been more important.

Acts on the road generally take out three types of insurance: equipment (to protect against damage and theft); public liability (in case an audience member is injured during a show); and non-appearance. The last two are relatively modern developments, but it is non-appearance that is arguably the most critical, especially as tours become longer.

At the start of October, promoter and agent John Giddings spoke at the International Festival Forum and suggested that David Bowie has effectively retired from touring, having performed his last solo British show in 2004 at the Isle of Wight festival (which Giddings runs). There have been rumours that Bowie is not willing to put himself through the exertion of a world tour. Unlike, say, 74-year-old Bob Dylan, who has played between 85 and 112 shows every year this century, Bowie has not played for so long it could be difficult to insure a tour against cancellations.

David Enthoven, co-founder of management company ie:music, whose biggest client is Robbie Williams, started managing acts in 1969 with EG Records. He says it was the late Willie Robertson, founder of specialist insurance company Robertson Taylor, who invented parts of touring insurance in the 1970s that acts today take as read. “There was certainly no non-appearance insurance then,” says Enthoven of his earliest experiences touring with King Crimson. “I remember [taking it out for the first time] in the mid-1970s for Roxy Music. It was a package that Willie Robertson thought up.”

The reality for most touring acts, as One Direction are finding and that was painfully made clear to Foo Fighters when Dave Grohl broke his leg on stage in Gothenburg in June, is that long tours are fraught with risk. “If you are insuring a 100-date world tour, as far as the insurers are concerned, the likelihood is that at least one of those 100 shows will be cancelled,” explains Paul Twomey, director of entertainment at insurance specialists Doodson Broking Group. “The singer’s voice could deteriorate as the tour goes on and they get more tired.”

Insurance companies regard some cancellations as collateral damage on lengthy tours, and structure their policies around that. “The underwriter could put in adeductible on the policy that means they won’t pay out if one show is cancelled,” says Steven Howell, head of music at Music Insurance Brokers. “So they might add in a one-show or two-show deductible. In a string of 30 shows, if you miss one or two, you are not going to be able to make a claim; but if you miss a third one then you can make a claim.”

The amounts of money at risk can be phenomenal. “For a stadium show, it could be anything up to two million quid,” says Enthoven. But it is not just the income from ticket sales at risk. “For an act like One Direction, they possibly make more money from merchandise than they do for the tickets,” suggests Twomey. So that has to be factored into their policies, which are often taken out at the earliest stages in planning a tour and will only run for as long as the tour lasts. “They are not annual policies, like car insurance, where you rack up year after year of no claims,” says Howell. “It is very specific to the life and health of the individual or the band members that you are insuring.”

A policy is generally worked out as a percentage of what the act will make at the end – typically 1.5%-2%, a figure that has not really changed in decades. “If more acts cancelled shows time after time, the premium rates would go up,” says Phil Middleton, general manager at ATC Management whose artists include Radiohead, Nick Cave & The Bad Seeds and Catfish and the Bottlemen.

You can read rest of this story at the Guardian