Many UK music festivals are not insured for communicable diseases, and are nervously waiting to see how far coronavirus spreads

The postponement of Ultra music festival in Miami and the cancellation of SXSW in Austin came in swift succession last week – the first two major music event casualties of a growing panic over the spread of the coronavirus.

Austin mayor Steve Adler pulled the plug on the latter a week before it was due to start, declaring a “local disaster in the city”: SXSW generated $356m (£271m) for the Austin economy last year. California’s Coachella festival, due to begin 10 April, is the most high-profile music event in the US, and if it gets pulled estimates say it could leave a $1bn hole.

The aphorism is that if America sneezes, the rest of the world catches a cold; if Ultra and SXSW cause a domino effect, and music festivals in the UK and Europe are shut down, the economic impact could be enormous. Worse still, most festivals will not have the correct insurance to cover their expenditure and projected losses if the government or local councils order them to cancel.

Festivals in the UK tend to insure themselves to the hilt against bad weather and have had, in the wake of the attacks on the Bataclan in Paris in 2015 and Manchester Arena in 2017, to add acts of terrorism to their policies. Coronavirus falls under what insurance companies term “communicable disease cover”, but almost no festival will have it.

“It is very rare,” says Steven Howell of Music Insurance Brokers. “The only people who tend to buy it are the ones that are concerned about things like foot and mouth or swine flu. I have some clients who buy it every year, but the majority don’t.”

Michael Rawlings, underwriting manager at Event Insurance Services, agrees, saying that outside of animal-based events, “very few people would have had the foresight to have insurance against communicable disease”.

Very few people would have had the foresight to have insurance against communicable disease Michael Rawlings, Event Insurance Services

As coronavirus is now a known disease on a global level, clients cannot retroactively add cover to existing policies or try to insure against it in future policies. Communicable disease cover would now specifically exclude coronavirus or any variant of it. “You can’t insure against something that is happening,” says Howell. “If your house is on fire, you can’t then decide to buy insurance.”

There may be panic in the US, but the UK music festival sector has some breathing space – for now. It is too early for events scheduled for the summer to cancel. They are, however, caught in a terrible limbo. Around this time is when a lot of their expenditure and outlay, beyond booking acts, has to happen to cover things like site build, crew and advertising. Do they immediately freeze all spending in the hope that, should the worst happen, they may only lose a percentage of what they could have been liable for? Or do they keep spending as normal and hope everything resolves itself before the event?

Rawlings suggests the coming months will allow for more informed decisions. “Had this hit in June or July, where the festivals are committed to those costs and the events are imminent, the impact would have certainly been much, much larger.”

Howell recommends staying calm and points to the falling number of new reported cases in China. “Push forward three months in the UK, we’re not even hitting the festival season anyway. It’s just a case of holding your nerve.”

Furthermore, if the UK follows France’s lead, where large indoor gatherings of over 5,000 people were recently banned, and extends that to outdoors events, niche players could actually be the accidental beneficiaries of an unfortunate situation. (France has now, however, cut this number to 1,000.) “I was talking to festival organisers [last week],” says Howell, “and some of the smaller ones are expecting to see an increase in ticket sales if some of the bigger ones are pulled.”

Howell suggests a blitz spirit could kick in if the worst happens, akin to when inclement weather scuppers small festivals. “I have heard stories of artists returning deposits and fees to the event because they didn’t want to see it suffer any more financially than they have already,” he says. “My experience of the UK festival organisers is that they’re very resilient and they crack on through.”