'There Seems to Be a Target on the Back on the Live Music Community': A Terrorism Insurance Salesman Explains Why America's Artists Are So Frightened

Lockton Companies Vice President John Tomlinson sells terrorism insurance to the stars. Business is booming.
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Lockton Companies Vice President John Tomlinson sells terrorism insurance to the stars. Business is booming.
Jason Aldean performs onstage at Nissan Stadium on June 9th, 2016, in Nashville, Tennessee.

Jason Aldean performs onstage at Nissan Stadium on June 9th, 2016, in Nashville, Tennessee.

Deadly attacks have turned concert venues in Paris, Manchester, and Las Vegas into grisly battlefields. America's latest mass shooting, which took place during a performance by country star Jason Aldean, took 59 lives, terrified concert-goers and re-opened the debate over gun control in Congress. In the process, these tragedies have shaken up a pivotal industry: the market for terrorism insurance.

Performers have always opted to insure their acts in case of cancellation. But now artists from Britney Spears to Orange Is the New Black showrunner Jenji Kohan are putting an extra 0.25 to 1 percent of their profits toward terrorism and political violence coverage, which pays an artist for shows canceled specifically in the event of a threat or attack.

John Tomlinson directs the Entertainment Group for Lockton Companies, the world's largest privately held insurance brokerage. His company insures more than 100 of the entertainment industry's biggest hip-hop, rock, pop, and EDM acts—and three out of four of them have terrorism insurance. Pacific Standard spoke to Tomlinson to learn why that number is rising.

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What exactly does a terrorism insurance policy do, and why do artists need to purchase it?

The history of terrorism coverage needs to be separated into two buckets: pre-9/11 and post-9/11. Pre-9/11, nearly all commercial policies included acts of terrorism within the scope of coverage for effectively no additional premium. Post-9/11, insurance companies began to require a separate purchase for acts of terrorism. For your general liability policy, you could buy back—for a nominal premium—terrorism coverage onto each of those policies. Therefore, if an act of terrorism was to play out and there was a bodily injury or property damage, the coverage would be in a position to respond on behalf of the artist.

There is another element of coverage we do a lot of work with in the music industry, which is called event cancellation and non-appearance coverage. This is an insurance product that touring artists buy to protect their touring income in the event that a situation prohibits them from being able to play the show. Event cancellation and non-appearance coverage excludes acts of terrorism and what's referred to in the industry as "political violence." Political violence is usually defined as riots, strikes, civil commotion, political unrest, things along those lines. Since event cancellation and non-appearance coverage excludes claims that result from those things, the artists have to buy a separate terrorism and political violence policy to bring back those coverage triggers.

Why is political violence and terrorism coverage separate from standard non-appearance?

Usually it commands a separate premium. Many times artists elect to only purchase event cancellation and non-appearance coverage for their tours. Historically speaking, many artists would also purchase terrorism and political violence for their shows abroad, outside of the United States, but would not purchase the coverage for their shows inside the U.S. We're beginning to see that change—really over the last 24 months. We're starting to see more of our clients requesting political violence and terrorism options for their tours, even if the tour is taking place inside of the U.S.

John Tomlinson.

John Tomlinson

What kinds of clients are interested in this, and how many?

Generally speaking, greater than 50 percent of our clients are buying terrorism and political coverage to protect their touring income.

We see interest now, regardless of the earnings of the tour. Even our less notable artists understand the need for coverage when they go out on the road. We see it across the spectrum, from our baby bands all the way up to our global superstars.

Are artists on certain tours more likely to purchase terrorism coverage?

It depends on where the tour is routing through—if they're playing shows in parts of the world that are perceived to be higher risk for threats of terrorism and/or political violence, artists are more inclined to purchase cover for those regions. Domestically, now, we're seeing a heightened interest in insuring shows that are happening here in the U.S.

What do you think is motivating that, specifically?

There's a heightened sense of understanding that these types of situations are entirely beyond the control of the artist. Regardless of how good a security plan you have for your tour, there's not a manner in which you can completely prevent these types of things from playing out, especially as it relates to the live music community. There seems to be a target on the back on the live music community, as we've seen now here in Las Vegas.

The artists that have been through a situation like Jason Aldean or Ariana Grande have unique perspective. As a result, management teams are a part of those circumstances also. I think, for the artists, seeing their peers involved in situations where fans that have purchased tickets to come see their performance arrive at the performance and never go back home—the reality in actually seeing those types of circumstances play out has really heightened the awareness of the need for coverage.

What kinds of threats can trigger a claim under this type of policy?

The most common we see are bomb threats to the venue or suspicious packages at the venue. Most of the threats are venue-related. We have seen threats to actual band members increase over the last couple of years, so we've actually broadened the coverage wording to include threats made to band members.

How much does this coverage cost?

Relatively speaking, it's still very competitively priced, depending on where the show is taking place that you're trying to secure coverage for. We're seeing rates for political violence and terrorism as it relates to event cancellation and non-appearance pieces anywhere for 0.25 to 1 percent of gross income of the performance that's being covered.

What risk does an artist take on by not getting terrorism insurance?

In typical artists contracts, the promoter is absolved from liability if a threat of terrorism or an act of terrorism prevents the show from taking place. If they don't have the coverage and the contract with the promoter stipulates that the promoter is absolved from liability, then the artist does not get paid their money, and, more times than not, has to send back or return deposit money that they've already collected from the promoter.

Why might an artist need to cancel later shows after an incident?

You could have a situation in which the artist and their production team are injured, which may result in a cancellation. In the case of Ariana Grande, the venue that she was playing became a crime scene, so all of her production gear was held in the venue for an extended period of time, which prevented her from being able to play shows subsequent to Manchester.

What are the risks associated with putting on a large concert?

The big focus now is on venue security. Unfortunately, we've learned that there's no way to mitigate these losses or eliminate these types of claim situations entirely. Especially on the heels of Las Vegas, the biggest focus right now is on security detail for the events.

How are recent terrorist attacks on concert venues—Manchester, Las Vegas—affecting your company and the industry in general?

It's required us to re-evaluate the policy forms, because we see different types of acts and threats playing out globally now. We've had to broaden some language. Unfortunately, these policies have been stress-tested in many different ways over the last handful of years. It's just educating our client to the risks that they face, certainly in different geographic regions but now here in the states as well. It's really been more of an educational process.

Do you think there will be a continued need for this?

I do. As long as we see these types of situations continue to play out and claims continue to be paid, that will have an impact on the offering of coverage and the price to purchase it.

This interview has been edited for length and clarity.

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