Recent research published by BVEP cites event activity was down 95% across the UK during the past 12 months from April 2020 and that the industry lost £57 billion of value from the pre-pandemic level of £70 billion1.
The good news now is that there are signs of recovery in the sector with many late summer festivals taken place and a programme of events planned for the remainder of the year. 2022 looks set to be a bumper year for events with many previously postponed or cancelled in 2020 and 2021, now scheduled to take place. It is thought the extra bank holiday in 2022 and the Governments’ recently announced Live Events Reinsurance Scheme will have a positive effect on activity next year.
COVID-19 could still have an adverse effect on the industry with many event organisers unable to commit to long term planning with continued uncertainty over future restrictions, or unable to afford the premiums associated with the Government scheme. The scheme offers, subject to policy terms and conditions, cost indemnification if an event has to be cancelled, postponed, relocated or abandoned due to new government imposed restrictions in response to COVID-19. Event organisers will be able to purchase this additional cover from participating insurers, on top of the standard event cancellation insurance policy for live UK events that are open to the general public to buy tickets.
The scheme which runs until 30th September 20222:
- Has premium set at 5% of the total value of insured costs and expenses (plus IPT but does not include brokerage)
- Will subject claims to an excess of 5% of the value of the insured costs or £1,000 (whichever is higher) per policy
- Requires cover must be purchased at least 8 weeks before the event is due to take place
The ongoing pandemic shouldn’t be the only item on the risk management and insurance agenda for event organisers and many other factors need to be reviewed and assessed;
- Cancellation products for non-Covid related events, such as cover for adverse weather for an outside event. An increasingly in demand product this year, following the passing of Prince Philip, has been national mourning cover. However, in our experience insurer capacity is limited to provide national mourning for HRH Queen Elizabeth II and they are unlikely to offer the full sum insured.
- Acts of terrorism are still very much on the agenda with UK threat level still substantial and the current unrest in Afghanistan and other parts of the world, bringing further risk.
- Contingency planning for cancellations and postponements; how these can affect your cashflow and supply chain. Can suppliers flip the payment to a new date and honour deposits? What happens when customers want their money back instead?
With these risks now becoming all too apparent within a challenging and hardening event cancellation insurance market, for event organisers, there is a definite conflict between planning in advance and being forced to organise events at the last minute due to continued uncertainty surrounding COVID-19.
This note is not intended to give legal or financial advice, and, accordingly, it should not be relied upon for such. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. In preparing this note we have relied on information sourced from third parties and we make no claims as to the completeness or accuracy of the information contained herein. It reflects our understanding as at 30th September 2021, but you will recognise that matters concerning COVID-19 are fast changing across the world. You should not act upon information in this bulletin nor determine not to act, without first seeking specific legal and/or specialist advice. Our advice to our clients is as an insurance broker and is provided subject to specific terms and conditions, the terms of which take precedence over any representations in this document. No third party to whom this is passed can rely on it. We and our officers, employees or agents shall not be responsible for any loss whatsoever arising from the recipient’s reliance upon any information we provide herein and exclude liability for the content to fullest extent permitted by law. Should you require advice about your specific insurance arrangements or specific claim circumstances, please get in touch with your usual contact at Gallagher.
Arthur J. Gallagher Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered Office: Spectrum Building, 7th Floor, 55 Blythswood Street, Glasgow, G2 7AT. Registered in Scotland. Company Number: SC108909.