The Financial Times newspaper has reported that the new UK government-backed reinsurance scheme for live events will be run by Marsh Commercial, which has sparked concerns from broking competitors over a potential conflict of interest.
According to a framework document seen by the FT, Marsh’s management consultancy arm Oliver Wyman was awarded the administration contract for the scheme that will now be delivered by Marsh Commercial.
The FT said event cancellation brokers at four different companies it contacted raised concerns over the potential for conflicts of interest and, in particular, sharing sensitive commercial relationships with a rival.
The £800m government-backed Live Events Reinsurance Scheme, which was opened on 22 September, came after pressure from the live events industry, which was keen to restart following Covid-19 lockdowns but lacked cover from an insurance sector bruised by event cancellations in the first wave of the pandemic.
Marsh Commercial told the FT it has appointed a team that will work only on the scheme and use a ringfenced IT platform. The firm said it has “long-established policies and procedures to manage any potential conflicts of interest appropriately”.
The FT also reported that market players are yet to see final policy wordings and event organisers are in limbo until they can secure cover. Last month, details of the scheme revealed buyers – from business conferences to music gigs – would have to pay premiums of 5% of the insured risk plus standard event cancellation cover. They will also pay an excess of 5% of the insured costs or £1,000, whichever is the highest, on making a claim.
The scheme, which is intended to run for a year to September 2022, would cover the costs of event cancellation due to government-ordered Covid-19 lockdowns. But it excludes cover for caps on capacity or where a local Covid-19 outbreak forces an event to cancel.
The government said it would pay 95% of claims, acting as reinsurer, and insurers would take a 5% share. Munich Re, Beazley, Arch, Dale and Ark have signed up to take part in the scheme.
After the announcement of the scheme in August, many buyers raised concerns that the scheme does not go far enough and had already missed the usual programme of summer festivals.
Lesley Robinson, CEO of British Marine, which organises the Southampton International Boat Show, said: “Although this new cover is welcome, it does come at a significant premium, which for many small businesses like ours that have endured extreme financial challenges during the pandemic, will impact heavily on our ability to generate surpluses.”