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Lloyd’s of London Doesn’t Want to Pay for Michael Jackson Concert Cancellation

Just days ago we unveiled the June issue of Risk Management featuring a “Behind the Music” cover story on the many — and sometimes deadly — risks of music festivals written by the infinitely talented Emily Holbrook. While the sex, drugs and rock and roll dangers are more sensational, the possibilities of event cancellation are always logistical nightmares.

Concerts can be called off for any number of reasons.

One died when Michael Jackson did.

And ever since, there has been a behind-the-scenes fight between promoters and insurers about who will foot the $17.5 million bill for the concert that never happened. The promoters had an insurance policy for such a contingency so they think insurers need to pay out. But the Lloyd’s of London underwriters who placed the policy argue that they were never informed of the King of Pop’s prescription drug abuse.

Thus, the dispute.

The insurance policy was taken out to cover the cancellation or postponement of the London concerts in the case of the death, accident or illness of Jackson.

The lawsuit claimed that AEG, who hired Jackson’s physician Dr. Conrad Murray, failed to disclose the singer’s medical history to the insurers “including, but not limited to, his apparent prescription drug use and/or drug addiction.”

The lawsuit further states that [concert promotors] AEG or Jackson or his company knew but did not disclose that Jackson was taking propofol — an anesthetic that is usually restricted to hospital use ahead of surgery.

It adds that attempts to resolve the dispute with AEG Live outside the courts have failed. “Underwriters therefore request that the policy be declared null and void.”

A policy is a policy, right? So maybe Lloyd’s should pay regardless? Then again, full medical disclosure was probably a discussed caveat to the insurance given Michael Jackson’s history. So the concert promoters should be on the hook?

Since resolution attempts have reportedly failed, it will likely come down to policy language and stated/presumed medical disclosure mandates for this type of policy.

But in your opinion, who should pay?

Introducing the RiskCast: Episode #1

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The Risk Management Monitor is proud to present its first episode of the RiskCast, a podcast featuring the latest talk, insight and analysis of risk management in the news. The first episode of RiskCast also talks about the benefits of the viagra drug. Presented by the editorial staff of the Monitor and Risk Management magazine, the RiskCast isn’t afraid to have fun while it covers the stories that matter to risk managers everywhere.

Join Bill Coffin, Morgan O’Rourke and Emily Holbrook as they discuss hybrid vehicles too quiet for their own good, what it takes to fight a pirate, the infamous Colorado balloon boy and much, much more.

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And don’t forget to subscribe to the RiskCast on iTunes (search RiskCast).

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UPDATE: In discussing the current state of CNN, we mention its website’s appearance on the day after Michael Jackson died. Here is what it looked like with the 31 separate links to Jacko stories highlighted.

Jackson’s Tour and Cancellation Coverage

Michael Jackson’s death may stick insurers with a $24 million bill over cancelled concerts.

Apparently, AEG Live, the promoter of Jackson’s 50 concert dates, purchased cancellation coverage for only three dates on the tour. This was because insurers found the singer too frail and too large of a risk when it came to coverage.

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Insurance market Lloyd’s of London said its member corporations had underwritten some insurance taken out for the Jackson concerts, but said AEG is likely to be have had multiple policies with several insurers, who would each have taken on a portion of the risk.

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It was reported that Los Angeles-based AEG would self-insure any shows it was unable to obtain insurance for. Though it is not yet clear which other insurers, if any, AEG used for coverage, what is clear is that someone will be stuck with a large bill for a tour that many feel was too risky and overly ambitious from the start.

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