Ever since the cancellation of Bluesfest in March the calls for COVID cancellation insurance for events has ramped up.

The live music sector has been a leading voice but event industry associations have been pushing as well.

The Victorian government inquiry in to the impact of COVID on tourism and events released their report this week and supported such a scheme.

As discussed in Chapter 5, a major ongoing issue for the events sector is the inability to obtain insurance to cover the impacts of the COVID‑19 pandemic. This could include circumstances where, for example, an event is cancelled or postponed due to a government‑imposed lockdown. As a result, the risk for event organisers is high due to the financial costs of a late cancellation or postponing of an event. For many smaller organisations, or for organisations under significant financial pressures, the cancellation of a single event could be devastating.

Recommendation 20: That the Victorian Government, as a matter of urgency, consider the issue of the events sector’s inability to insure against the impacts of the COVID‑19 pandemic. This should be done in consultation with the Victorian Managed Insurance Authority working in cooperation with the Insurance Council of Australia and representatives from the events sector. This should also consider the merits of establishing a shared risk underwriting scheme.

BECA are working on it

BECA’s Recovery and Rebound Framework details a range of initiatives for consideration that includes direct and targeted support for the business events industry. As part of this framework, BECA has been advocating for risk mitigating policies and investments.

BECA’s suggested Business Events Catalyst Fund outlines options of a rebate, incentive grant payment, non-refundable underwriting facility, or nation-wide event insurance scheme – designed to support Australian associations and corporations move forward with their in-person business events and build confidence in an uncertain environment.

ASE asked a number of event managers for their views on a government COVID insurance option.

Peter Jones (PJSE): Hard one – the easy answer is yes but it’s not that simple to just start one up. I’ll bet we are all vaccinated and open again for business before this becomes a reality. 

Gary FitzRoy (Expertise Events): YES 100%.Organisers of exhibitions and events are spending a lot of money up front which is unrecoverable, if an event is pulled then depending on timing the money is spent. Then organisers have to spend money to promote it again if it runs few months later.

The cancellation or postponement affects venues and their staff, suppliers, exhibitors and the visitors who may have bought a ticket and incurred travel costs. The Government has to step in otherwise the industry has no incentive to run events and exhibitors and visitors just won’t commit and the recovery could take years.

Simon Thewlis: Save Victorian Events has been pushing hard on the issue of government backed COVID cancel event insurance since August 2020.  It has long been a critical issue for getting most types of events happening – from small not-for-profit events up to major corporate events or festivals.  And, for a long time, it’s been a lonely road.

Steve Loe (Precedent Productions): Within reason. If an event is only a few days/weeks out from occurring and then a lockdown is imposed there should be support from Government to cover any out-of-pocket expenses. If an event can be postponed with enough time that does not financially impact a business, then there is no need for the insurance?

Geoff Donaghy (ICC Sydney). We are involved in advocacy efforts on a number of fronts to support a safety net for event organisers, including a potential cancellation insurance scheme, which needs to be supported by both State and Federal governments.

Claudia Sagripanti (EEAA): The EEAA has been advocating since early 2021 on the need for event cancellation insurance and advanced deposit schemes, particularly in NSW and Victoria. These calls are gathering momentum as we partner with other broader industry associations on this issue.  

A major issue is the state by state approach. For example while there has been state based grants, these may not be available to companies where a portion of their revenue comes from another state, for example a Victorian organiser will not be able to claim a grant for events in New South Wales as they are not domiciled in the state.

While these support packages are state based, it is critical to have some national co-ordination to provide targeted support for organisers, venues and suppliers in Business Events.

ASE: and is should it be federal or state? 

Peter Jones: State – as there will be multiple factors that will be unique to each event and where it is held.

Gary FitzRoy: The issue of course is that lockdowns are imposed by state governments while many events are run in multiple states or by organisers in a different state.

The one thing that has become clear it is the states who control borders, so I think it lands with them and like overseas this just means each state will need to recognise what events contribute and have a pool of money to pitch and get events and if they don’t they simply won’t host them making their current investment in purpose built facilities worthless.

Simon Thewlis: One of the reasons we don’t currently have COVID cancel event insurance is because each level of government views it as the other level of government’s responsibility.  

The reality is that our industry is a national industry.  We all work right across Australia so a state by state solution will be problematic.  Conversely, it is the states that control for core risk – so a purely federal scheme would cause a moral hazard.  

There is precedent for the Victorian government to operate a scheme through the Victorian Managed Insurance Authority as they do for building surveyors.  There is precedent for the Federal government to operate the scheme through the Australian Reinsurance Pool Corporation.  This was set up after 9-11 to underwrite (or re-insure) terrorism based risks as the commercial insurers left the market.  

The federal government underwrites the scheme to the tune of $10b and all relevant insurance policies pay a levy to the scheme to cover the terrorism insurance risks.  

The federal government has announced it will be using the scheme to underwrite (or re-insure) some of the climate change risks of insurance policies for northern Australia.  

So the ideal scheme would involve the specialist event insurers retailing the policies which include coverage for COVID cancel for events, and they in turn pay part of the premium to the Australian Reinsurance Pool Corporation to underwrite these risks.  And the feds would have agreement with the states to in turn underwrite their share of the risk of the reinsurance pool.  

The most critical thing is that it is a simple model and process and that it covers events of all size and not just the really large festivals.

Steve Loe: This should be shared across NSW and Federal governments. State Government should fund the majority (as the decision of lockdown is imposed by state leaders), with the Federal Government supporting the states.

Some relevant media reports

‘Too risky’: Performers call for insurance to cover COVID-19 losses

Bluesfest losses tipped to top $10m as industry begs for live event insurance

Festivals were always high-risk. COVID has made them a ‘massive gamble’

More than a quarter of UK music festivals cancelled over insurance fears

Resources

Insurance cover for cancelled events during COVID-19 – MinterEllison