‘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…
4. Calculate the cost of insurance for a band with tour earnings of €5m and a policy cost of 2% of earnings.
Ahead of the tour, brokers will be appointed to cost up and take out insurance policies. Part of that will be based on the act’s touring history – or, more specifically, their cancellation history. If they keep missing shows then their premium will rise.
