Government-backed insurance scheme to launch in UK

Following months of campaigning by live music industry bodies, the British government today (5 August) announced a £750 million insurance scheme for live events.

The Live Events Reinsurance Scheme, a partnership between the government and the Lloyd’s of London insurance market, will see the former acting as a reinsurer, guaranteeing policies issued by commercial insurers to live events that are open to the general public, including festivals and business events. The scheme will cover costs incurred in the event of cancellation due to the event being legally unable to happen due to government restrictions.

Event organisers will be able to purchase the government-backed cover, which will sit alongside standard commercial events insurance, from next month, with a number of prominent Lloyd’s insurers, including Arch, Beazley, Dale, Hiscox and Munich Re, having pledged their support for the scheme.

Industry reaction to the scheme is broadly positive. “This vital intervention from the UK Government offers certainty to artists, concert and festival promoters in the live entertainment market,” says Denis Desmond, chairman of Live Nation UK and Ireland. “This is very welcome news and will help keep the sector and its employees working.”

A statement from umbrella body LIVE (Live music Industry Venues and Entertainment) – which has been pushing for government-guaranteed insurance since at least this time last year – says: “We welcome the announcement of a government-backed insurance scheme, which we have been calling for since the start of the pandemic. We look forward to working together over the coming weeks to determine the final shape of the policy and to ensure it can support the full return of the sector in the face of the most likely impacts of Covid.”

“The sector has been calling out for government to act for over a year and we now have something tangible”

“This is welcome news,” adds Phil Bowdery, chairman of the Concert Promoters Association. “The sector has been calling out for government to act for over a year and we now have something tangible. While the new scheme won’t cover all our risk, this intervention will help protect the industry that we all know and love.”

The scheme is understood to charged to event organisers at a 5% premium. But while the scheme covers cancellation due to a national or local lockdown, it does not cover cancellation due to operational restrictions such as the reintroduction of social distancing at shows, or cancellation in the event of a headline artist contracting the disease.

Paul Reed, CEO of the Association of Independent Festivals (AIF), has welcomed the news but also expressed concern regarding the scheme’s scope. “AIF has campaigned for a government-backed insurance scheme for festivals for over a year… We are pleased that government has listened, and we welcome this intervention to address the insurance market failure. It is positive that festival organisers will now have an option for Covid cancellation.

“The scheme doesn’t, however, cover a festival needing to reduce capacity or cancel due to social distancing restrictions being reintroduced, so it remains imperative that government continues to work with the sector in areas such as Covid certification to try and avoid such an eventuality and ensure that organisers can plan with increased confidence for 2022.”

The Live Events Reinsurance Scheme will run from September 2021 to the end of September 2022. If events do have to cancel, organisers will pay a pre-agreed excess and the government and insurers have an agreed a risk share per claim. This starts with government paying 95% and insurers 5%, progressing to them covering 97% and 3%, respectively, and finally government covering 100% of costs. The split depends on the losses incurred by the insurer from the scheme to date.

“The scheme doesn’t cover a festival needing to reduce capacity or cancel due to social distancing being reintroduced”

Parklife Festival’s Sacha Lord adds: “The events sector has been in dire straits throughout this crisis and this move will not only save hundreds of upcoming events, but will support the thousands of freelancers behind the scenes who depend on the sector for their own livelihoods.”

Rishi Sunak, the UK chancellor of the exchequer, comments: “The events sector supports hundreds of thousands of jobs across the country, and 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.”

The culture secretary, Oliver Dowden, adds: “We’ve been here for live events throughout the pandemic with billions of pounds of rescue funding. Today is an important next step as we develop live events insurance to give them the confidence they need to plan for a brighter future.

“Our events industries are not just vital for the economy and jobs; they put Britain on the map and, thanks to this extra support, will get people back to the experiences that make life worth living.”

“Lloyd’s has stood by its customers throughout the pandemic, and we are pleased to strengthen those efforts by partnering with the UK government to deliver the Live Events Reinsurance Scheme,” says Lloyd’s’ John Neal. “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.”

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