Government’s Live Events Reinsurance Scheme branded ‘totally inadequate’

The exhibitions industry fought for protection from covid-related cancellation losses. The Live Events Reinsurrance Scheme was described as an £800m policy to protect events businesses when it was launched in September. But four months on and after a new wave of cancellations, neither the government nor administrators of the scheme have been able to provide a single example of a successful payout.
Emily Wallin investigates

 

The government’s insurance scheme, designed to protect events businesses from cancellations, has been shown to provide only narrow protection to exhibition organisers.
Events organisers, politicians and legal experts have said the Live Events Reinsurance scheme offers only very limited cover. Despite speaking to dozens of organisers, EN has been unable to find a single business that has received a pay-out.
Despite promising the scheme would provide £800m of support to protect businesses from losses cause by Covid-19 restrictions, officials have refused to disclose the value of policies taken out or whether a single claim has been paid.
Administrators of the scheme Marsh Commercial told EN that only the government’s Department for Digital, Culture, Media and Sport (DCMS) could tell us how many events have been insured under the scheme.
But the DCMS said they could not disclose any information about take-up of the scheme because the information was “commercially sensitive”.

Totally inadequate 
Labour’s shadow culture secretary Lucy Powell MP has been calling on the government to disclose the real value of the scheme.
Speaking to EN she said: “The government’s Live Events Reinsurance scheme is a flop, failing to provide the safeguards the live events and exhibitions sector needs to operate alongside Covid-19. The scheme as designed is totally inadequate, only covering full national lockdowns, not staff or artists’ illness, or changes in restrictions such as social distancing which have a significant impact on viability. That’s why we’re calling for the government to urgently review the scheme and make it fit for purpose.”


The scheme will only cover losses in the event of a lockdown – or local authority restrictions banning events taking place – but hundreds of events have been forced to cancel or postpone in the past two months because of a lack of confidence and Plan B restrictions since the emergence of the Omicron variant.
In addition, the initial grace period of the scheme has now ended meaning cover is only valid if purchased at least eight weeks before an event.

Andy Palmer, from administrators of the scheme Marsh Commercial said that any event cancelled under anything less than a lockdown would not be covered.
He added: “If the government or local authority, acting within its legal powers, cancels an event due to Covid-19 related public health concerns, then any claim will be covered. The Government or Local Authority action must be published or formally issued in writing to the insured or the event organiser, as per the scheme rules.”

Ambiguity 
Michelle Crorie, a partner at insurance lawyers Clyde and Co, explained that there was a lot of ambiguity in the wording of the scheme rules – yet to be tested by a successful claim.
She said: “The government will reinsure the risk that an event is cancelled due to an ‘event being legally unable to happen due to Government Covid restrictions’. The words ‘legally unable to happen’ are likely to be carefully scrutinised by all. It is worth bearing in mind that, unlike in some other jurisdictions, the government did not strictly make events illegal. However, regulations rendered attendance illegal during the period of lockdowns.
“Should social distancing requirements be reinstated, rendering larger events financially unviable, it is unclear whether this will amount to an event being ‘legally unable to happen’.
“Other very notable restrictions to the scheme are that it covers expenses only rather than any loss of profit. Where an events company only obtains revenue from an event taking place, this is likely to be a significant gap in coverage.
“Furthermore, many UK companies operate events both nationally and internationally but only events physically taking place in the UK are covered by
the scheme.”

Narrow cover
Amanda Barnes, chief executive of Faversham House, said they had taken out cover – but knew the chance of a payout was “very narrow”.
Barnes said: “The issue is it pays out on any cost in the eventuality a government body prevents your show going ahead. Even then, if it pays out in those circumstances it strikes me when I’ve asked questions of underwriters no one really has a handle on how a payout will work. There’s ambiguity if you were
able to move the event to a different
time slot.”
Faversham House did take out some cover for their events under the scheme, but Barnes accepts it may be money they’ll never see again. In December they had to cancel an event with just 22 hours notice because of Plan B restrictions and a lack of confidence in live events in the run up to Christmas.
Barnes explained: “There was no point insuring that because it wouldn’t have paid out.
“At the end of the day it comes down to each organiser’s appetite for risk.
“This is where difficulty comes and it’s very much what I hear other organisers feel. If you have an event aimed at consumers, and the government is telling you to work from home, consumers have a different appetite for risk and consumers will decide if they want to go or not.
“Quite a few consumer shows have gone ahead this month. But if the government is saying work from home and your event is business orientated it is totally illogical that people will think it’s safe to go to an event.
“It’s a very conflicting message. We felt it was so close to Christmas it would be irresponsible to go ahead, however many mitigations and safety measures we put in place.
“We did take out some insurance, not for the whole value of events, but a proportion. We have several large-scale events coming up in February and March that we have insured. As it transpires we have moved the February one to March and I’m not sure how that affects our insurance.
“It’s of limited benefit, but it’s a matter of individual appetite for risk.
“There’s a lot of misinformation – even what DCMS has put out in their frequently asked questions – which is not widely available, are slightly counter to what we are hearing back from the underwriters.”“There would be a naivety to insure an event for £500,000 and assume it’s covered for £500,000. I’m not sure it will work like that. The assessors would want to look at whether you’d been able to move the venue at no cost. So, when we’ve put in insurance we looked at things we know are upfront costs we wont get back, like staff costs.
“If it pays, it will cover a proportion. It might help.
“It fills a need and it would have been very useful to have it back in march last year, because at that time when in lockdown it was very hard to have the confidence to go ahead.
“We lobbied for it because in the long lead in to an event, you need to know if you can push the button now.
“It’s almost worthless if there’s never going to be another lockdown, but then we were told there wouldn’t be another lockdown last time.
“I would be astounded if the government doesn’t make money on this. They will definitely make money because I haven’t heard of one scenario where there has been a payout.
“In lots of ways we’re hoping there isn’t any payouts if events can go ahead, but it is an extra cost.
“And you cannot just take out pandemic insurance, you also have to take out general exhibition insurance. The cost is substantially more than you might expect. The other thing to note, you pay 5% insurance sum up front premium, and if worst happens you would pay out another 5%. So if you insured £500,000 you would be in it for £50,000. It’s quite expensive.
“It took the government a long time to get there and they did get there. That has to be a big tick. It has limited use, but that might be because we are coming out of the pandemic.”

Big tick
A DCMS spokesman said: “Our Live Events Reinsurance Scheme, worth more than £800 million, gives event organisers the confidence to plan for the future and follows the unprecedented support the government has provided for the culture sector, including the £2bn Culture Recovery Fund.”

 

This feature appears in the February issue of Exhibition News. 

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