UK government backs Covid-19 insurance for live events but buyers call for more protection

The UK government has backed a £750m insurance scheme with Lloyd’s for live performances and events, after months of campaigning for a state solution to help the sector recover from Covid-19 restrictions and cancellations. However, some buyers are already concerned that the scheme does not go far enough, and for many it has come too late for the usual programme of summer festivals. The Live Events Reinsurance Scheme, which is in addition to standard event cancellation cover, will run for one year. It will indemnify costs incurred should an event be cancelled, but only in response to government-ordered Covid-19 restrictions. Organisers will be subject to an agreed excess, with the government paying 95% of any claims and insurers taking a 5% share. This will rise to the government covering 100% of the claim, depending on the losses incurred by the insurer under the programme. Lloyd’s insurers Arch, Beazley, Dale, Hiscox and Munich Re are taking part in the scheme. It goes live to buyers – including business events, conferences and exhibitions that the general public buy tickets for, as well as music events and theatres – next month until September 2022. Contingency underwriters largely retreated from covering live events following the outbreak of Covid-19 last year. The industry has been calling for a government scheme to allow the traditional summer festival season to go ahead. In January, Glastonbury festival organisers announced cancellation for a second year, amid concerns from the sector that lack of insurance cover was blocking events. Chief executive of UK Music Jamie Njoku-Goodwin said the new government-backed solution has been a long time coming. “For months, UK Music has been warning about the catastrophic impact of the market failure in insurance for live events. The inability to obtain insurance has already caused many cancellations this summer – these have been devastating for the entire music industry and there were fears that without action we would have seen major cancellations continuing well into next year too,” he said. Although the government’s solution has been largely welcomed, some have still raised concerns. 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.” The Society of London Theatres (SOLT) said the scheme “addresses only some, and not all” of the risks that Covid-19 poses for theatre productions. Many shows, including Andrew Lloyd-Webber’s new staging of Cinderella and the West End’s revival of Hairspray have been forced to cancel shows at short notice when cast are pinged as close contacts of a Covid-19 case and have to self-isolate for ten days. SOLT said the UK government must find ways to cover more of the Covid-19 risks that face the sector and make transfer costs “significantly more viable”. It said theatres need protection against future caps on audience numbers to meet social distancing requirements. “The threat of their possible reimposition represents a major risk that we need to obtain insurance cover for… Theatre productions need long-term sustainable cover for shows running daily over a considerable period of time. These risks and requirements are not addressed properly by the proposal. For any scheme to be effective it has to be comprehensive, and it also has to be affordable,” said SOLT. The new scheme was announced by Chancellor Rishi Sunak as part of the UK government’s Plan for Jobs. “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,” he said. UK culture secretary Oliver Dowden, whose department published a report in May warning that the survival of the UK’s festival sector was threatened without insurance cover, said: “This is one of the only insurance schemes in the world to cover such a wide array of live events and not put a cap on costs claimed per event.” Lloyd’s CEO John Neal said: “This unique and critical cover will enable live events to resume around the country with confidence as society begins to reopen and begin its recovery, and we are proud to be playing our part.” Broker Tysers, which specialises in the entertainment sector, welcomed the scheme after months of campaigning. “From the very start, we’ve campaigned without stopping to see a programme like this introduced to protect our customers and our country’s proud culture of live music, performing arts and business events,” said Tim Thornhill, Tysers director. He said the structure of the scheme “means the swiftest possible transfer back to the commercial insurance market once there is more certainty in the future, to take on the risks directly”. The British Insurance Brokers Association (BIBA) said the “much-needed” risk transfer solution follows a “huge collaborative effort across the insurance industry”. Graeme Trudgill, executive director at BIBA, said the association provided the UK’s Department for Culture, Media & Sport with details about how cancellation insurance works and underwriting considerations to help build an intervention scheme. “We hope there will be further positive discussions about the finer details,” Mr Trudgill said.

UK government backs Covid-19 insurance for live events but buyers call for more protection

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