In September 2021, the UK government opened their long-awaited insurance scheme for live events and festivals. The good news is that events are happening, suggesting that organisers have the confidence to push ahead despite uncertainty.
However, we’ve yet to see anyone actually use the government scheme, despite enquiries being made. This may be because, despite a lot of hard work being put in by insurers and brokers, the scheme itself doesn’t seem fit for purpose.
The result? Some organisers and event businesses are of the opinion that this is no more than a PR exercise for a government pressured into doing something. While the truth remains to be seen, we here at RiskBox have our own thoughts on the matter…
You’ll need to dedicate 5% of your budget just to take it out. This means that, if tickets have already been sold, then it could be unaffordable to the organiser. And even if they haven’t been sold, it’s still another cost passed on to the customer.
This is fine for the very biggest acts with loyal followings, but it could be a huge issue for smaller events. For example, if you’re already paying approximately £80+ to see a chart-topping act in a stadium, you’re less likely to complain about the price hike. Smaller gigs, however, might struggle to justify the rise.
The scheme only really covers lockdowns, so a massive chunk of COVID cancellation exposure isn’t covered. That means if a venue is told to reduce capacity – making the event economically unviable – they wouldn’t be able to make a claim.
The same is true if an artist has to self-isolate, or if there’s a rise in infections near to the event that discourages customers from attending. You’ll only receive compensation in the event of a civil authority shutdown, be it local or national.
The restrictive terms also have high excess or coinsurance applied. In other words, it costs £1,000 or 5% of your budget – whichever is greater.
With premium already at 5%, the maximum amount covered could in effect be 90% of the expenses incurred, depending on how the claim is calculated. For flagship events, that could be a massive amount for an organiser to self-fund, and subsequently too high of a risk for them to pursue the event.
As the premiums will have been paid by the organiser, plus the excess deducted from the claim payment, the insurance is really just damage limitation at best.
Without this security, there’s minimal incentive for organisers to run festivals, gigs or other events when the percentages are so high.
When the COVID cancellation insurance scheme was announced, the insurance industry was concerned it was premature and that no one was ready to deliver. So it has transpired.
It’s presently very difficult to get an idea of cost and details as there are so few insurers able to quote. In fact, most that we’ve spoken to are still waiting to finalise agreements with the government.
So, what can event organisers do?
It remains really tough. Some larger organisers will be able to charge higher ticket prices to pay for COVID cancellation, and possibly to create their own pool for the odd uninsured cancellation. But for the small event organisers, we unfortunately expect most to be forced to self-insure the entire risk – the solution on offer simply doesn’t work for many of them.
Whatever the size of your business, we’d recommend a quick call with one of our team before you take any action. That way, we can walk you through the benefits of each option available to you, and help suggest a solution that meets your needs.
You can reach us by emailing firstname.lastname@example.org or calling 0161 533 0411.