How Metallica Made A Common Mistake In Suing Lloyd’s Of London

By Isobel McCue

It came as a surprise for many when iconic heavy metal-rock & roll band Metallica and insurance monolith Lloyd’s of London (Lloyd’s) recently shared headlines.

The band had maintained a “Cancellation, Abandonment and Nonappearance” policy through Lloyd’s, and sued the insurer in the Los Angeles Superior Court in response to the postponement of their South American tour due to COVID-19 restrictions.

They are claiming breach of contract and are seeking compensatory damages following the nonpayment of their policy. A common point of confusion.

In the midst of the flurry of press regarding the suit, a Lloyd’s representative clarified via a press statement: "Lloyd's is not an insurance company, it oversees and regulates a market of independent insurers," the statement read. "For that reason, we have no information on any specific policy or lawsuit and in any event are not authorized to comment on matters in litigation."

The band members’ mistake is one all too common in the U.S. Even headlines mistook the nature of the claims, with many reading that Metallica was suing Lloyd’s of London itself, when in truth the named defendants consist of Lloyd’s syndicates and London Underwriters.

In its own suit, Metallica acknowledges Lloyd’s as “a market in which independent insurance underwriters join together syndicates to sell insurance, mainly through brokers, under the umbrella of the Lloyd’s brand name.”

Simply put, Lloyd’s is NOT an insurance company.

In the U.S., there is no marketplace per-se, but rather a multitude of single insurance companies who rarely intersect. By contrast, the Lloyd’s marketplace consists of individual underwriters who come together to take a portion of a risk proposed by brokers. These underwriters are backed by Lloyd’s security, which allows their recognition as an A rated financial stronghold with a long-established reputation.

Because Lloyd’s operates as a large marketplace full of experienced and specialty underwriters, people turn to Lloyd’s when they acquire a unique, complex, or conventionally uninsurable risk. Like, for example, insuring the first auto policy in 1904, or when Bruce Springsteen had his legendary singing voice covered at $3.5 million, or Betty Grable’s famed million-dollar legs.

Leave It To The Experts

When Metallica’s broker procured this coverage in advance of the band’s lengthy tour, it seems the band was not made aware of the “communicable disease exclusion,” in their policy, resulting in their nonpayment and the misdirection of their lawsuit. There was never anything wrong with the policy, only with the broker’s failure to properly educate their client.

So, despite the action, it is unclear whether the band will gain traction in their suit due to this misunderstanding, highlighting the importance of working with a broker experienced in this market.

Isobel McCue is a marketing intern with The Westport Group.