Another week, another event organiser struggling amid the COVID-19 pandemic. Outback Music Festival Group, the organisers of the popular Big Red Bash Festival, has lost a court battle against its insurer over a $3 million insurance claim.
According to an ABC report, the Outback Music Festival Group expected around 100,000 people in Queensland for the festival in 2020. However, it was forced to cancel the festival due to pandemic concerns and then filed for a $3,182,444 indemnity insurance claim.
The event organiser’s insurer rejected the claim on the grounds that an exclusion in the insurance policy meant the festival was not covered for “any loss directly or indirectly arising out of, contributed to by, or resulting from a communicable disease.”
During the hearing at the Federal Court of Australia, the organisers argued that “the communicable disease led to a restriction on travel,” and with at least 65% of the attendees travelling from interstate, the event could not proceed.
However, the judge ruled against Outback Music Festival Group, stating that “the exclusion is engaged because the decision to cancel was taken because of a communicable disease or the threat of a communicable disease.”
“The event had to be cancelled for the safety of all concerned in the context of the overwhelming operational difficulties thrown up by COVID-19, any number of which was or were sufficient to make holding the event impossible,” the judge added, as reported by ABC.
The recent case highlights the industry’s calls for a federal insurance scheme for live events as organisers were forced to cancel festivals and concerts across Australia, especially when the Omicron variant emerged.
Julia Robinson, general manager of the Australian Festivals Association, warned that the ongoing wave of COVID-19 infections had made the industry’s future bleak.
“We were looking very positive,” Robinson told NME Australia. “There was a lot booked in March and April. This has thrown everything into continued uncertainty. If we don’t get this insurance, we won’t have a pipeline to deliver this year.”
Meanwhile, the Insurance Council of Australia (ICA) claimed that the live events insurance scheme will be impossible to implement without government intervention.
“The Insurance Council of Australia recently commissioned an independent study to look at options to mitigate the economic effects of future pandemics, and it concluded that insurance coverage for pandemics is not possible without government involvement,” an ICA spokesperson told Insurance Business, adding that insurers are now excluding coverage for pandemics, given the risk COVID-19 presents to events.
However, according to The Guardian, the Department of Prime Minister and Cabinet argued that market failure is not an argument for government intervention “if the failure does not have a material impact on the functioning of the wider market.”