The safety net behind the scenes: why event cancellation insurance is essential

The safety net behind the scenes: why event cancellation insurance is essential

Though COVID-19 was over five years ago now, the destruction it left in its wake has not been forgotten. The social devastation caused was harrowing, and the same can be said for the financial fallout. This was acutely felt in the sports and entertainment industry as hundreds of thousands of events were cancelled and millions in ticket, sponsorship, TV, hospitality and merchandise revenue was lost.

The cost of the unexpected

In 2020, Australia’s live entertainment industry lost an estimated $1.4 billion in revenue, with ticket sales plummeting by nearly 70% as COVID-19 restrictions forced widespread cancellations.¹ AMPSEA (Australian Mass Participation Sporting Events Alliance) stated that ‘COVID-19 was leaving a $1.1 billion hole in the mass participation sporting event industry.² The AFL alone reported revenue dropped by $342 million across the league and clubs in 2020.³ Major festivals like Splendour in the Grass and iconic theatre productions were called off. In Victoria, extended lockdown periods wiped out almost 79% of live event attendance, and New South Wales followed closely behind with a 73% decline.⁴

Why event cancellation insurance matters

Before COVID-19, the prospect of a pandemic of this nature was perhaps unimaginable and the possible effects unquantifiable. However, the reality unfolded, and the devastation became acutely evident, revealing not only the scale of potential losses but also the plain truth that events of this magnitude can, and likely will, happen again.

Without insurance, the financial fallout from an unexpected cancellation can be critical, covering revenues in venue hire, event build, marketing, staffing, player fees, ticketing and income. These losses can easily reach into the millions, posing a serious threat to an organiser’s financial stability.

In an industry where margins are tight and risks are high, insurance transforms uncertainty into resilience. By covering these costs, it enables organisers to safeguard their investment even when the unexpected occurs.

What are some of the common perils under an event cancellation policy?

Large events that have sizeable operating costs are predisposed to perils that can lead to considerable loss, such as, but not limited to:

• Natural perils - hurricanes, thunderstorms, floods, bushfires or extreme heat can damage the venue or make it unsafe. This is becoming an increasing risk exposure due to climate change (the effects of which are particularly acute here in Australia).
• Geographical exposures- an event may be disrupted by transport system disruptions, national mourning or premises requisition.
• Fire or explosion- damage to the venue that stops the event from taking place.
• Violent acts- threats or acts of terrorism, strikes, riots or civil commotion may make it unsafe for large public events to be held.
• Illness or injury - sudden illness of a key performer, speaker or athlete can force cancellation or postponement.
• Broadcast failure - live sports and entertainment events rely heavily on broadcasting revenue. A transmission failure due to satellite issues, severe weather, or technical faults can result in major financial losses from refunds to sponsor claims.

From uncertainty to resilience: the benefits of event cancellation insurance

In today’s unpredictable environment, event cancellation insurance is an important strategic safeguard. This is especially true for events that involve significant logistical resources and substantial operational costs.

Investing in a bespoke insurance solution offers financial protection through reimbursement of sunk costs and loss of revenue. This brings peace of mind to those who are responsible for organising the event by considerably reducing their financial exposure during the planning stages.

It also shows stakeholders you’re prepared and responsible, which in turn increases trust and strengthens partnerships. If the event needs to be delayed and takes place at a later date, policies offer postponement coverage and financial rescheduling support.

The key takeaway

Ultimately, event cancellation insurance transforms uncertainty into confidence. It empowers organisers to plan boldly, knowing they’re protected against the unexpected.

¹ Live Performance Australia, COVID-19 wiped $1.4 billion from live entertainment industry in 2020 – a 70% decline nationally, Media Release, <https://liveperformance.com.au/wp-content/uploads/2021/10/LPA-MR-COVID-19-wiped-1.4-billion-from-live-entertainment-industry-in-2020-a-70-decline-nationally-21October2021Final.pdf> [accessed 17 September 2025].
² Australian Mass Participation Sporting Events Alliance, $11 billion hole in mass participation sports industry, AMPSEA, <https://www.ampsea.com.au/media/11-billion-hole-in-mass-participation-sports-industry> [accessed 18 September 2025].
³ ABC News, How the AFL survived a big hit from COVID-19, 22 April 2021, <https://www.abc.net.au/news/2021-04-22/how-afl-survived-a-big-hit-from-covid-19-coronavirus-football/100083470> [accessed 18 September 2025].
⁴ Live Performance Australia, COVID-19 wiped $1.4 billion from live entertainment industry in 2020 – a 70% decline nationally, Media Release, <https://liveperformance.com.au/wp-content/uploads/2021/10/LPA-MR-COVID-19-wiped-1.4-billion-from-live-entertainment-industry-in-2020-a-70-decline-nationally-21October2021Final.pdf> [accessed 17 September 2025].