Denise Hattingh, Managing Director of KEU UNDERWRITING MANAGERS (KEU)
An article published by McKinsey & Company in July 2020, commenting on the post-pandemic recovery of US small businesses, indicated that it would take the hardest-hit sectors; of which arts, entertainment, and recreation topped the list, more than five years to get back to their pre-Covid state. However, would the same be possible for South Africa’s battered film and entertainment industry?
KEU’s single biggest event clients reported international cancellations resulting from the outbreak as early as the first week of March 2020, and by the 13th of March, they – KEU, had already presented its first estimated figures to their Insurer, Centriq Insurance. By the 18th of March 2020, KEU had registered its first claim and appointed a Risk Assessor, followed by their first interim policy payment on the 14th of April. This was uncertain territory for us all, but we continuously worked with our event organisers that had annual policies in place, and paid ongoing interim payments to assist these organisations to retain staff, honour contractual liabilities and remain liquid. However, many event organisers did not have Event Cancellation Cover, only Event Liability cover. Due to the uncertainty around the lockdowns, all our annual policyholders had their policies extended for the rest of the duration, at no additional cost. The event organisers who had once-off liability policies had to be refunded due to all their events being cancelled with immediate effect.
When it came to the film industry, KEU had encountered different challenges to that of the event sector. When the nationwide lockdown was announced, all film sets had to be closed and international cast and crew members had to return to their country of residence with immediate effect. Communicable diseases, like Covid-19, as well as any efforts to curb the spread of these diseases, such as the nationwide lockdowns, weren’t claimable under this policy, only Illness Cover for nominated key cast and crew members were included. We had to review each policy individually to ensure that all cast, crew, props, locations, equipment and vehicles were dealt with in terms of the existing policy and hiatus periods were noted during this time. The local film industry was able to recommence by the 4th of May 2020, but soon after, we had our first COVID claim, when a nominated key crew member tested positive resulting in the set being placed under lockdown. We paid the additional costs incurred over this period.
Since the outbreak, we have paid a total of R82 million in claims, with R2.3 million; mainly airline tickets, still outstanding. During this period KEU also had to cancel and refund the premiums of 55 Event Liability policies. It has ultimately required us, as an authorised service provider, to review all our policies. Unfortunately, many events were not insured for Event Cancellation. Especially the events that did not have the main performer and had been running successfully for many years, such as the likes of your big Easter festivals, an annual tradition, and sporting events such as the Comrades, Two Oceans, etc. Obviously the further the event’s date, the easier it was for organisers to cancel and cut their losses, but all events arranged for Easter were too close to show real savings. To further the dilemma, certain contracts such as Exhibitors, Venue, and Crew contracts were completely silent on the matter. At that time, all and sundry started reviewing their contracts to see who owes who, and what to do with ticket refunds, postponement dates, etc.
Crews were immediately affected. As most crew members were freelancers, there was no safety net apart from the Government stimulus which had its own widely published difficulties. Technical services companies, catering services, cleaners, security, and medical support was immediately brought to a standstill. The pandemic has caused unimaginable and very long-lasting devastation to the overall market, however, many have survived by obtaining other skills or branching out into various other sectors. Some artists started giving online singing lessons, writing books, hosting various online concerts, just to survive. But can an industry recover in survival mode?
Looking back, it’s almost been two years since the global pandemic brought this sector to its knees, with the events market still struggling to get back onto its feet, one must commend their resilience in many respects for finding online solutions. Even some of the exhibition organisers have moved over to the virtual events space where they are connecting clients, buyers and sellers. The local film market has been fortunate to be returning sooner but has not yet found itself at pre-Covid stages. This market also had to immediately adapt to Covid-19 regulations and has reviewed the stance on catering, make-up and hairstyling, as well as crew and cast limitations on set.
We are delighted to see that the industry is slowly rising from the ashes, with global restrictions and international travel bans being lifted. Now that events are returning, we need to reiterate the importance for event organisers, sponsors and venue owners to ensure they secure Event Liability cover, as required by the Sports & Recreational Act 2010 (SASREA). For those organisations that do not want to risk hosting live and in-person events yet, and are still opting for virtual events, although event liability is not required for virtual events, the shift has now moved to transmission failure, increasing the demand for cover should an audience not be able to view or connect to an event they or a sponsor has paid for, due to technical errors.
The pandemic has proven that we do not have a crystal ball to predict and foresee the future, and we therefore will never know when or what the next big crisis will be, however, there are still many risks associated with hosting an event, aside from pandemics. Therefore, even with Covid having since been listed as an exclusion, is event insurance still highly relevant?
Now more than ever, in this process of recovery, event organisers, sponsors and venues can’t afford the risks of not having special events cover in place, the industry and the livelihoods it sustains depends on it.