UK government hesitant on providing insurance scheme for festival industry

Updated: Feb 17, 2021

Festival organizers in the UK are calling not having insurance “the biggest barrier” for this festival season and have been asking parliament for a government backed insurance scheme. The MP’s have been hesitant to provide such a scheme and claim a realistic date for the return of festivals is needed before it can be realised. But for the organizers it's essential to have an insurance scheme before they can start any date.

If festival organizers want to start planning for a possible festival summer, they will need insurance to make sure they won't lose their pre-production costs. Losing this money could lead to bankrupting big parts of the industry. Last year many insurance companies had to pay out millions to festivals, meaning this year festivals have trouble finding insurance. Leading them to turn to their government for help.

A spokesperson for the UK government explained they want a realistic date for festivals to return before they can provide festivals with an insurance scheme. Such a date will have to be determined by public health experts. In turn festival organizers will have to decide if organising the events will be viable, but can only do this as soon they have insurance. Gregor Pryor, a partner at the entertainment and media industry group at law firm Reed Smith called the situation:

“chicken and egg – you can’t say, ‘I can only put the scheme in place once I know when it may [be viable],’ when the whole point of the scheme would enable people to plan.”

Another reason for the government being hesitant with providing an insurance scheme, might be the shrinking of the UK economy. Due to the lockdown and large number of sick people, the productivity of the country has fallen. The economy has shrunk 10% over 2020, the highest of all the G7 countries. UK Citizens have been borrowing more and spending less, which has led to the UK government treasury shrinking significantly. This doesn’t leave a lot of space to fund an expensive insurance scheme.

According to Paul Reed, CEO of the Association of Independent Festivals, most large scale festivals will decide if they will organise a 2021 edition this month. A recent AIF survey found that the average "go or no-go" decision date for most smaller scale festivals will be the end of march. This means that if the UK government is genuine about setting up an insurance scheme for festivals they will need to act fast. Else it won't be necessary anymore.

To resolve the insurance problems festival organizers face, other countries, including the Netherlands, have already set up different systems to reimburse organizers if their festivals get cancelled this year.


Source: The Guardian | The Guardian