HM Treasury and the Department for Digital, Culture, Media and Sport (DCMS) have announced details of a Government-backed insurance scheme, which will enable an organiser to make a claim should their event be cancelled as a result of Government restrictions.
After months of campaigning and lobbying by industry associations, and as a number of high profile events have cancelled, the Government has unveiled the Live Events Reinsurance Scheme, worth more than £750 million. The Government has partnered with Lloyd’s to deliver the scheme, which will see the Government act as a “reinsurer” – stepping in with a guarantee to make sure insurers can offer the products events companies need.
The Live Events Reinsurance Scheme, which will be available from September 2021 until September 2022, is a cost indemnification scheme that protects against costs incurred due to the event being legally unable to happen due to Government COVID restrictions.
For example, the scheme will cover organisers if they are issued a direction by their local authority but it will not cover organisers if a headline act pulls out because they have contracted COVID-19.
A number of insurers in the Lloyd’s market are supporting the scheme, which will provide events companies with the option of purchasing cover, alongside standard commercial events insurance.
If events do have to cancel, after organisers have covered the agreed excess, the Government and insurers have agreed a risk share per claim. This starts with Government paying 95 per cent and insurers five per cent, progressing to them covering 97 per cent and three per cent respectively and finally Government covering 100 per cent of costs. The split depends on the losses incurred by the insurer from the scheme to date.
The news has been largely welcomed by the events industry. However, some concerns have been expressed about how far the scheme goes. Paul Reed, CEO of the AIF, said: “AIF has campaigned for a Government-backed insurance scheme for festivals for over a year, from raising it as a headline issue with the DCMS Select Committee to working with DCMS colleagues and presenting detailed evidence and data to support the case. We are pleased that Government has listened, and we welcome this intervention to address the insurance market failure. It is positive that festival organisers will now have an option for COVID cancellation. The scheme doesn’t, however, cover a festival needing to reduce capacity or cancel due to social distancing restrictions being reintroduced, so it remains imperative that Government continues to work with the sector in areas such as COVID certification to try and avoid such an eventuality and ensure that organisers can plan with increased confidence for 2022.”
Sacha Lord, co-founder of the Parklife Festival, said: “The events sector has been in dire straits throughout this crisis and this move will not only save hundreds of upcoming events, but will support the thousands of freelancers behind the scenes who depend on the sector for their own livelihoods.
“We can start to rebuild the sector with confidence, and renew the UK’s status as a global leader in entertainment and cultural events.”
Tom Clements, president of National Outdoor Events Association, commented: “We’re delighted to see this scheme announced by the Government and are fully supportive of it. Although we’ve had some events this year, a number couldn’t run with the risk of no insurance cover, there has remained a massive cloud over the future of the industry that this scheme will begin to disperse.
“The biggest issue we have as an industry is the confidence and risk attached to putting on major events. Until now there just hasn’t been the incentive for events to take place beyond 2021; those that have, are doing so because of commitments made, and tickets sold, back in 2018/19. This scheme reduces the risk and ups the incentives; in short, whereas before we have had events, now we have an opportunity to rebuild an events industry.”
Lesley Robinson, CEO of British Marine, the organiser of Southampton International Boat Show, and BOATS2020, which was cancelled in 2020, said: “The announcement of the Live Events Reinsurance Scheme could not have come at a more critical point for us and is the news that we, and the entire events industry have been desperately calling for, so we welcome this scheme.
“Having worked closely with Government to get to this point, this insurance cover is now incredibly important for large events like the Southampton International Boat Show which have significant upfront infrastructure costs. It simply isn’t worth contemplating what another enforced closure of our event without this insurance would have done to our own industry.
“Although this new cover is welcome, it does come at a significant premium, which, for many small businesses like ours, which have endured extreme financial challenges during the pandemic, will impact heavily on our ability to generate surpluses that in our case are reinvested entirely in our Industry.
“With the successful rollout of the COVID vaccination scheme in the UK, we hope that this insurance scheme is only ever an unused safety net for the events industry.”
Chris Skeith, CEO of the Events Industry Alliance, said: “This Government-backed insurance scheme will bring some much needed confidence to a sector, and its supply chain, which often acts as the UK’s shop window to the world, and allow the industry to rebuild itself despite the continued uncertainty pandemics bring. Our members provide trading platforms for over 180,000 businesses, fuelling trade and economic impact across the UK and across every market sector, and we look forward to playing our part in driving the UK’s economic recovery. This new insurance scheme will hopefully play an important role in our ability to do that as we reopen in a safe and responsible manner.”
Rishi Sunak, Chancellor of the Exchequer, said: “The events sector supports hundreds of thousands of jobs across the country, and I know organisers are raring to go now that restrictions have been lifted. But the lack of the right kind of insurance is proving a problem, so as the economy reopens I want to do everything I can to help events providers and small businesses plan with confidence right through to next year.
“We have some of the best events in the world here in the UK – from world-famous festivals to your local fair. With this new insurance scheme, everything from live music in Margate to business events in Birmingham can go ahead with confidence, providing a boost to the economy and protecting livelihoods through our Plan for Jobs.”
Oliver Dowden, Culture Secretary, said: “We’ve been here for live events throughout the pandemic with billions of pounds of rescue funding. This is an important next step as we develop live events insurance to give them the confidence they need to plan for a brighter future.
“Our events industries are not just vital for the economy and jobs; they put Britain on the map and, thanks to this extra support, will get people back to the experiences that make life worth living.”
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