Australia’s live entertainment industry continues to suffer from the impact of COVID-19 induced cancellations. However, in one state, the situation is improving.
“It’s going quite well,” said Angela Kelly (pictured), chief insurance officer for the Victorian Managed Insurance Authority (VMIA), the Victorian government’s insurer and risk adviser.
In December, the Victorian government launched Australia’s first COVID-19 event insurance. The 12-month scheme offers cover for creative, sporting, business and community events with revenue or costs ranging from $20,000 to $10 million.
“The demand is certainly there and that's a really positive sign from our perspective,” she added.
Kelly said, one month into the scheme, there are just over 100 in force policies. There are also invoices and policies due for payment taking the likely total number of policyholders up to more than 200.
However, she said, some of the policies cover more than one event so the number of events covered is higher that this figure.
“I think one of the things that's working really well is the ability to proactively make contact with event organizers and work with them to make sure that they're getting the support that they need,” said Kelly.
Kelly said they’re managing to pay claims within about a week.
“We're dealing with about eight [claims] at the moment,” she said.
Kelly added that with the current lockdown restrictions in place in Victoria until April they’re currently looking at a “forward runway of events” that could be impacted with cancellations or postponements.
“Roughly 90 events might be impacted between now and April,” said Kelly.
Under Victoria’s COVID-19 Event Insurance, policies provide a 100% payout if cancellation is forced due to public health orders from either the Victorian or Commonwealth government. If health restrictions reduce event capacity, 50% of the declared value of the event is payable.
Premiums cost 2% of the declared event value for creative industry events and small events up to $100,000. Larger events including sports, business and community events will pay a 4% premium.
Respected insurance industry veteran, Dallas Booth wants the COVID-19 event insurance announced by the Victorian government to be seriously considered by other Australian states.
“Especially for some of these bigger events that cost a lot of money to stage,” he said. “It’s a huge loss if they have to cancel at the last minute,” added Booth.
The Morrison government has rejected calls for a government funded insurance program for live events.
According to The Guardian, the Department of Prime Minister and Cabinet claimed that market failure is not an argument for government intervention “if the failure does not have a material impact on the functioning of the wider market.”
However, Booth said the leisure, tourism and entertainment sectors were “absolutely impacted” by the COVID lockdowns.
During an Insurance Business interview in November, Booth gave the example of the Byron Bay Blues Festival. The event was cancelled by the NSW health minister less than 24 hours before it was due to start because of the discovery of a local COVID-19 infection. Organisers were expecting about 15,000 people.
In the United States, Chubb chairman and CEO Evan Greenberg has called for public-private partnership programmes involving the US federal government that leverage insurance, infrastructure and risk sharing to manage the impacts of pandemics.
Through Chubb’s proposition, smaller businesses would have access to “rapid liquidity, providing predictable, efficient and prompt payment,” Greenberg explained to a Senate Committee hearing. This liquidity, he said, would require government subsidisation of the premium charge to ensure affordability and participation in the programme.
Larger businesses with greater financial resources would not get subsidisation of premiums under the Chubb plan. Rather, the government would create a reinsurance facility solely to cover business interruption pandemic risk for those entities at an appropriate price.
“Private insurance companies could write policies at market terms, retain a portion of the risk, then reinsure the rest of the government facility,” said Greenberg. “Our proposed framework builds on these concepts. Depending on the severity of a future pandemic, this may only turn out to be a partial solution. However, it is a robust, fiscally responsible plan.”