Reinsurance Scheme Gaps

Adele Redmond looks at the details behind the Live Events Reinsurance Scheme.

DJ playing an event
Photo: Getty Images

Industry leaders welcomed long-awaited details of the governments Live Events Reinsurance Scheme launched in September as providing “an opportunity to rebuild”, but warned that gaps in it could hamper the sector’s recovery.

The £800m scheme won’t cover cancellations caused by a return of capacity limits and costs incurred due to non-appearance of acts – a distinct possibility if they test positive for Covid-19.

“I think we all know if things got really bad in terms of hospitalisations and deaths that the government is not going to default to a national lockdown,” says Association of Independent Festivals (AIF) CEO Paul Reed. “That’s the nuclear option – but we could see restrictions.

“Social distancing is unmanageable for festivals, on an economic level and a management level. It’s about viability rather than profitability.”

National Outdoor Events Association (NOEA) president Tom Clements said the scheme reduces the risk and increases the incentives to restart events. “Unfortunately, we do need to underline that we’re not out of the woods yet,” he says. “We’ve lost a lot of people, a lot of skill and talent, and we also have businesses that still have had no income for the last two years. We need government to look after these businesses until summer 2022.”

An ‘outline’ of the scheme was quietly published in early autumn before it went live on the 22 September. It will run for a year with a review scheduled for the spring. Cover must be purchased at least eight weeks before an event, although this requirement won’t take effect until next year.

Premium price
The government insurance covers events that must be cancelled, abandoned, postponed or relocated as a direct result of restrictions – national and regional lockdowns included.

However, organisers must pay a 5% premium to the government, either up front or in arrears monthly. They are also required to have standard cancellation cover, for which premiums have ballooned to 2%-2.5% over the past 18 months. “Frankly, the margin [of profitability] on some festivals can be 10% or even less,” Reed said.

There is also an outstanding question around who can take out cover too – the new document only specifies organisers and it is unclear whether individual artists are eligible.

Most claims will be subject to an excess of 5% of the insured costs or £1,000, whichever is greater.

Question of cost
With the average major UK festival costing £6m, there is a question of how far the £800m can stretch. Applicants to the scheme will be broken down into three tiers. The highest, Tier 3, is for events seeking cover of more than £267m; Tier 1 insures events for losses up to £100m. Once a policy is allocated to a tier, it cannot be shifted.

At the time of writing, the Government Actuary’s Department has refused a Freedom of Information Act request from ArtsProfessional to release modelling for the scheme, saying it could jeopardise events’ financial security.

The Business Visits and Events Partnership estimates the value of music events and festivals alone at £23.6bn. Other arts and cultural events are worth £5.6bn.

Speaking to the BBC, Greg Parmley, CEO of industry collective LIVE said it’s crucial the reinsurance scheme protects the events sector from “the real risks that we’re facing. There are hundreds of thousands of workers who rely on live entertainment being open and it’s important that they’re protected as well.”

First published at

Crowd at an event

Quotes for Cover

NME has reported concerns saying that a “a growing number of event and festival organisers have been unable to obtain quotes for cover despite the scheme officially opening almost a month ago.”

In a comment piece, it writes: The Association of Independent Festivals’ (AIF) CEO Paul Reed has told IQ that the scheme doesn’t cover “a festival needing to reduce capacity or cancel due to restrictions being reintroduced”, adding: “It’s clear from the government’s winter ‘Plan B’ that restrictions will be reintroduced long before there is any sort of national lockdown.

“The scheme only covers you in the event of a civil authority shutdown at either local or national level, so it is extremely limited in scope.”

Reed said that the AIF had recently surveyed their members on this issue and found that 58 per cent of responders were ‘not likely’ to pursue quotes from the UK Live Events Reinsurance Scheme – which, he says, “isn’t indicative that the scheme is going to be widely used by the sector”.

“At the moment, you can’t obtain actual quotes, so that’s another issue. Until this is properly in play, we won’t know the full extent of these issues and whether it is a viable scheme or not. So they need to get on with it and get it in a position where it can be rolled out properly.”

While the scheme is “going to take a bit of work from government” as it doesn’t currently apply to artists or the live events workforce, Reed added that he remains hopeful that the scheme “could well change in some ways”.

“I appreciate government has put a lot of work into this. There are still details being thrashed out around the scheme and questions that the sector has put to government, so the scheme could well change in some ways.

“But I think the fundamentals aren’t going to change and it’s not going to cover anything other than some sort of shutdown – that’s basically a trigger point that the government has agreed with the insurance industry.” Open Air Business

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