Last month the government launched its £800 million Live Events Reinsurance Scheme. The scheme will support events such as concerts, festivals and business conferences that are at risk of cancellation or delay due to an inability to obtain COVID-19 cancellation insurance. The government will act as a ‘reinsurer’ by stepping in with a guarantee to make sure the insurers that are carrying the scheme can offer the products that the events industry need. This follows calls from within the industry for the government to act to help insure against late cancellation. Earlier this year we saw big names such as Boomtown and Glastonbury having to lay down their weapons against the battle to bring festivals back to life. In June the Association of Independent Festivals (AIF) reported that more than half of UK festivals had been cancelled, and that AIF members had typically spent on average £451,500 each planning for such events. These cancellations were often due to a lack of insurance and the uncertainty this generates. Enter the Reinsurance Scheme, but has the government provided event organisers with a solid solution?
Who is eligible?
Event organisers who are holding events open to the general public, that are physically located within the UK, and are set to take place between the launch of the scheme and 30 September 2022.
What does this cover?
The scheme is a cost indemnification scheme that protects against losses incurred by organisers due to an event not being able to legally take place because of restrictions. It is important to note the scheme sets out a rather long list of losses that fall under the category of “Excluded Loss” and therefore are not covered by the scheme, including losses relating to:
- a lower demand for tickets;
- a limitation in venue capacity;
- self-isolation of staff or performers; and
- lost or foregone revenue or profit.
This will also not cover situations whereby an event can still legally go ahead, but there are restrictions such as social distancing in place. Put simply, this is designed to assist if we are placed into another lockdown.
If cover is available, the premium is set at 5% of the total value of the insured costs, and cover can be purchased up to the full cost of the event.
What do event organisers need to do?
Organisers must purchase the relevant cover from the specific insurers that are participating in the scheme (Arch, Beazley, Dale, Ark and Munich Re). However, this is not standalone insurance, meaning organisers will also have to purchase a general cancellation insurance policy as well.
This cover needs to be purchased at least 8 weeks prior to the event taking place (unless the event is taking place within 12 weeks of the launch date).
Reaction to the scheme
The hope was that this scheme would prevent another year of cancelled events, and this appears to be a step in the right direction after two summers of uncertainty. But the industry response to the scheme has been fairly lukewarm, with the AFI reporting that, of their members surveyed, 58% of responders were unlikely to pursue quotes from the scheme, and many in the industry have raised some serious criticisms. There are concerns that after a difficult 18 months, with little to no revenue for some event organisers, the premium required for this cover may place the scheme out of reach for many. In addition, there are growing reports that event organisers have been unable to obtain quotes for cover since the scheme launched, causing concerns over the accessibility of the scheme.
Even if organisers are able to obtain a quote, it may fall short of providing the robust safety net that many expected. As set out above, this is not a comprehensive cover for all the risks inherent to organising an event during a global pandemic. For example, if a concert cannot go ahead due to a performer catching COVID-19 or self-isolating, the scheme is of little assistance. In addition, if the rumours of a ‘Plan B’ on restrictions come into fruition, neither will it assist if the event must be cancelled due to an inability to facilitate vaccine passports or mandatory masks. Whilst the scheme provides organisers with more certainty than the last two years, it unfortunately may not go far enough.
For the full scheme rules, see here.
“The events sector supports hundreds of thousands of jobs across the country and as the economy reopens, we’re helping events providers and businesses plan with confidence right through to next year”