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UK insurance scheme for live events hit by concern over conflicts of interest

Brokers and events organisers have criticised a delayed government-backed £750m insurance scheme designed to carry the UK’s events industry through the pandemic, citing concerns over conflicts of interest as well as its costs and limits on cover.

Chancellor Rishi Sunak said at the start of August that the scheme would help support live events threatened by any further lockdowns or Covid-19 restrictions.

It was meant to be in place from September to help organisers plan a busy reopening schedule of live events, from corporate conferences and awards dinners to music and comedy gigs.

But multiple market participants approached by the Financial Times last week said they had yet to see the final policy wording. The lack of progress has left events organisers unsure whether they will be able to secure coverage.

A number of insurance brokers, which are used by organisers to find cover, also expressed dismay that the scheme has been handed to one of their biggest rivals to administer.

The government’s framework document shows it has contracted Oliver Wyman, the management consultancy arm of Marsh McLennan, the professional services group, as the administrator. But market participants have since learned that the scheme is to be delivered by Marsh Commercial, part of the group’s insurance broking division.

Brokers of event cancellation insurance at four different companies raised concerns over conflicts of interest given their competitive relationship with Marsh, the world’s biggest insurance broker.

One, speaking on condition of anonymity, said they would have been comfortable with Oliver Wyman, but said Marsh represented “probably our largest competitor”. They said: “There is that concern that . . . am I going to be giving full details of all my clients and all my clients’ events?” 

The same unit of Marsh has administered a pandemic compensation scheme for film and TV producers. But brokers said that their rival presented a bigger competitive threat in the broader events space and the insurance programme was likely to require a greater amount of sensitive details.

In a statement, Marsh Commercial said it had “long-established policies and procedures to manage any potential conflicts of interest appropriately and in accordance with regulatory guidelines”.

Marsh had a “dedicated team working only on the scheme’s administration and using a ringfenced IT platform”, it said, adding that these procedures were shared with market participants shortly after details of the scheme were announced.

The government declined to comment on the details of the scheme but said it would “continue to work closely with the insurers on the delivery of the scheme”.

Tim Thornhill, director at entertainment insurance broker Tysers, said he was “more than willing to proactively work with [the government] to overcome what currently seem to be deal-breaker issues, as soon as possible” to ensure the scheme’s success.

But the programme is also facing questions over value for money. To obtain Covid cancellation cover, organisers have to pay a premium equal to 5 per cent of the insured risk, plus tax and the cost of the underlying event-cancellation policy. That could push the total premium to between 8 and 10 per cent, according to market estimates.

The scheme is designed to cover organisers against lost expenses if a government shutdown stops an event. But it does not offer cover for the impact of a state-mandated reduction in capacity, for example, or where a Covid outbreak means an event has to be called off.

One organiser of a black-tie dinner and awards ceremony next month said that they were struggling to find any cover for the event with just weeks left. They added that the lack of a workable scheme at this late stage was worrying given it was likely to be a busy season with events delayed by Covid taking place along with the usual pre-Christmas corporate parties, dinners and ceremonies.

John Giddings, the promoter behind the Isle of Wight music festival, told Music Week the scheme was “just too expensive” and had “so many caveats”.

Andrew Duxbury, head of contingency at Beazley, one of the insurers in the scheme, said the cover provided was “narrow” but that it was also a “step in the right direction”. He said the industry was keen to make it work, while acknowledging the challenge of designing a scheme that insurers were willing to back after the sector racked up billions of dollars of event-cancellation losses during the pandemic.

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