At the same time, the industry itself I thriving. Live music revenue will grow at a compound annual growth rate (CAGR) of 7.9 per cent in the next five years, reaching R1.5 billion in 2019, up from R1.0 billion in 2014. In line with its recorded music sector, South Africa’s live music industry is also more similar to a Western-based model than that of its African neighbours, where a small number of large promoters dominate and are behind most of the big-name acts, according to PwC: Entertainment and media outlook: 2015 – 2019 South Africa – Nigeria – Kenya. Given its increasing prominence on the local music scene, Denise Hatting, authorised representatives of KEU Underwriting Managers, explains the process of underwriting a multi-peril and complex event such as a rock concert.

The first risk management tool that you use is the proposal form, which the broker uses to provide us with information to understand the type of event. The event organiser will then specify if they have an internal or external safety officer appointed. For the bigger events it is a requirement, as the Joint Operations Committee (JOC) together with the municipality allocates a safety officer for your event. Once the insured submits a safety plan with procedures through JOC, they are supplied with a risk rating for the event.

On the bigger events, we pre-appoint a risk surveyor, who will meet with the safety officer to go through the various aspects of the event: from specific requirements to what needs to happen if there is bad weather and you need to postpone the event. Loss adjustors are pre-appointed as well; so the insured is never left on their own to make a decision, and if a claim arises they already know exactly what they are covered for.

We underwrite each event differently, depending on the circumstances and criteria. So if we are looking at an exterior event, we first need to consider if a stage is covered. If the stage is covered on three sides with a roof, you can then handle some rain with your first concern being the performers on the stage and the electrics.

The next question is who is so important to the event that without this person the event will not take place. For a large international event, this is quite easy: it is the artist itself. However, often the artist has contractual agreements with local event organisers that say, ‘if something happens to my manager or guitarist then the event will also not take place’. You have to be very specific as to who these nominated people are to be included under the insurance cover.

Then if you have something like travel delays, owing to bad airport weather or strike action, you need to consider how this may affect people arriving in South Africa. Obviously, if they arrive on the day of the event, you have a bigger exposure which you may then make provisions for.

You additionally look at where and when the event is happening. For example, an outdoor event in the afternoon in summer in Gauteng puts you at a risk of a thunderstorm. Some artists then also have very specific criteria about the equipment that travel with them. It really depends on what you are insuring and what are the critical objects that are required for a successful event.

A local promoter will quite often have a contract with international promoters and all agents of the artist. For example, international promoter Live Nation operates in South Africa, having formed strategic alliance with local concert promoter Big Concerts, according to PwC.

They will, therefore, prescribe specific underwriting criteria (annually) with regard to liability, such as are you covering all of the subcontractors working on the event (e.g. the person setting up the stage). As a consequence, promoters need to understand the criteria of his contractual obligation and ensure it is followed through by the insurance policy.

Of course with the weakening rand, we are now seeing international acts requiring much larger sums (in rands) of liability cover, which is in turn increase the insurance cost to the event organiser.

It is essential, therefore, that both the broker and the event organiser understands exactly what is required in the contract in order to manage these risks and requirements appropriately.