News

UK live events Covid insurance scheme paid out just once

The UK state-backed insurance scheme designed to help keep the live events sector going through the coronavirus pandemic paid out just one claim of £180,500, while generating almost £6mn in premiums, according to official data.

The “live events reinsurance scheme”, which was set up in September 2021 and wound up a year later, paid out to the organisers of an electronic music festival after it was cancelled because the venue was needed as a vaccination centre.

The details were published by the Treasury in response to a freedom of information request by the Financial Times, which revealed the scheme collected £5.9mn premiums to cover 169 events but received just one successful claim.

The FOI did not include the number of unsuccessful claims but one insurance broker said the design of the scheme meant it could be difficult to get a payout. “They were pretty hardline on the way that it worked,” he said.

UK prime minister Rishi Sunak, when still chancellor, unveiled the live events reinsurance scheme in August 2021 as festival and events faced a second summer of uncertainty after the last Covid restrictions had been lifted only weeks earlier in England. The product was designed to fill a hole in the market after insurers had withdrawn cover for Covid-related cancellations.

“With this new insurance scheme, everything from live music in Margate to business events in Birmingham can go ahead with confidence,” Sunak said at the time. The government, which acted as the “reinsurer” of last resort, promised it would also deliver “value for money for taxpayers”. It was backed by a handful of insurers including Lloyd’s of London firms Beazley and Hiscox.

Major events such as Wimbledon and the Brit Awards were insured via the scheme but limitations of the cover — which would not pay, for example, for a cancellation due to an artist or production staff catching Covid — reduced wider take-up.

The only payout was made to a promoter trading as Terminal V for its event, Trick Scotland, the Treasury said. According to a notice at the time, Trick Scotland’s planned show in late December 2021 was cancelled as the Scottish government extended its vaccination campaign at Edinburgh’s Royal Highland Centre. Terminal V did not respond to a request for comment.

The limited take-up of the scheme, originally billed as a £750mn commitment by the government but later upped to £800mn, reflected the challenge of trying to design a product a year in the pandemic. Insurers had already moved to shed their exposure to pandemic-related claims and were loath to take more such risk back on their balance sheets.

Patrick Davison, underwriting director at the Lloyd’s Market Association, which represents insurers, said the scheme “took a hell of a lot of work to get off the ground . . . at a time when very few were willing to take a risk”.

The government said the scheme had “played a vital role in getting the live events industry up and running once Covid restrictions were eased” and that nearly 3mn people are estimated to have attended events supported by the scheme.

Articles You May Like

Treasury, wrestling with challenges, leveraging private sector
Why Europe is a laggard in tech
Slowing Japanese inflation complicates end of negative interest rates
Wealthy Britons’ spending habits make it harder to curb inflation, BoE official says
Make sure your brain has a diverse portfolio too