After Covid-19 hit, events organisers lost billions of dollars, unable to claim losses on insurance. Now the New Zealand events industry wants the Government to step in as underwriters to help the sector survive. Jane Phare reports.
Before Covid-19 slipped through our island borders in early 2020, Stu Hartley had a thriving business specialising in insurance for live events. He loved nothing better than news of a big concert, festival or trade show coming up. If the stage caught fire, the festival was flooded out or the star performer got sick, he was ready with a payout.
Now, Hartley's phone isn't exactly running hot. Like a pack of collapsing cards, he's watched as scores of events and concerts have been cancelled. No events, no insurance needed.
"Prior to March 2020, communicable disease was always available [as an insurance risk] but nobody ever took it out. This took us all by surprise," he says.
The cancellations have left promoters, organisers and suppliers millions of dollars out of pocket, with many questioning whether they will survive long enough to be involved in future events.
More than a year ago, Hartley began talks with Business Events Industry Aotearoa (BEIA) about persuading Lloyds of London syndicates to underwrite a $20 million insurance policy so organisers could claim at least part of their losses if they were forced to postpone an event. The problem was the $1.5m premium payment. No one had that sort of money, least of all the BEIA.
The organisation's chief executive Lisa Hopkins appealed to Stuart Nash, Minister of Economic and Regional Development, and the Ministry of Business, Innovation and Employment (MBIE) in June, asking if the Government could pay the $1.5m premium. The idea was that events organisers would take out a $3000 premium, enabling them to claim up to $100,000 if an event was cancelled.
Hartley and Hopkins concede the insurance policy wasn't the best in the world, but say it was better than nothing.
"It was the only insurance policy," Hartley says. "Working with Lloyds we were able to get off the ground the world's first insurance for coronavirus."
By concentrating on business-related events, he could argue that most conferences and trade shows were held indoors, were ticketed events and that good data was available on the level of exposure. But even that was a hard ask in a global events insurance sector that has suffered an estimated $11.7 billion in losses from event cancellations.
"From a claims perspective it was larger than 9/11," Hartley says.
"In all of the chaos in the world, New Zealand was kind of the shining light simply due to our numbers. So we were always of the opinion that if communicable disease or cover for cancellation for events was going to come back into the market, it was always going to be New Zealand first."
The New Zealand Events Association aimed even higher in its approach to the Government, last month asking Nash and Prime Minister Jacinda Ardern to establish a $50m insurance fund so events organisers and suppliers did not carry the full burden of losses as a result of Covid cancellations.
The association's general manager Segolene de Fontenay says the reduced 50-person cap on gatherings under alert level 2 "brought the sector to its knees", with event professionals facing zero revenue from the beginning of an outbreak to the very end.
Losses caused by event cancellations "basically wipes them out", she says.
Events organisers are losing millions of dollars, unable to stage large gatherings until alert level 1, and an industry worth billions of dollars to the New Zealand economy is stagnating, she says.
Last month's letter to the Government pointed out that the sector was already facing a skills shortage because highly experienced people were leaving the ailing industry, with more likely to follow.
"We know the sector has already lost capability, expertise and its supply chain. This will unfortunately only get worse on top of having a flow-on effect on sectors benefiting from events such as tourism, hospitality and regional economies," said the association's letter.
"This is particularly concerning with recruitment and planning under way for significant major events such as the 2022 Cricket World Cup, 2022 Women's Rugby World Cup and the 2023 Fifa World Cup, all of which are receiving Government investment."
De Fontenay says that so far the association has had no response from the Government. Some sort of underwriting support was imperative if local event organisers and their suppliers were to survive.
Those in the industry point to a UK Government-backed insurance scheme for live events. The UK Government partnered with Lloyds to develop the $1.5b Live Events Reinsurance Scheme, giving promoters and organisers the confidence to go ahead and plan major events.
But so far the New Zealand Government has been less than enthusiastic, not wanting to set a precedent. Instead, it has pointed BEIA to the $50m Regional Events Fund, suggesting they apply to regional tourism organisations for a share. But Hopkins and Hartley say there was no uptake from the regions and most of the funds have already been allocated.
This week, in a statement from Nash's office, the minister said he was aware of the industry's interest in having some sort of insurance, or assurance, to support the events sector. He again referred to the $50m Regional Events Fund to support the BEIA proposal.
"But decisions about how that funding is spent sit with the regions which were allocated the funding. To date there has not been agreement and that idea has not been taken up," the statement said.
"We continue to consider options to support the sector. This includes whether public health settings such as the current consideration of Covid vaccine certificates will give the sector the confidence and certainty it needs to proceed with planning."
In the meantime, as lockdowns drag on, devastated event organisers cancel long-anticipated trade shows, concerts, festivals, agricultural and flower shows, and special events. Those cancellations destroy thousands of hours of work, threaten livelihoods and put a whacking great dent in the economy.
Hartley looks back at the Covid-free days of insuring events like a Six60 concert, the ASB Classic tennis, summer festivals and involvement with the America's Cup. Now, business is not looking good.
"We went to having zero revenue literally overnight because there are no events. We hurt as much as everybody else."
He's now working with events organisers on festivals and concerts due to run next year.
"But the biggest risk for them now is what happens if they spend the hundreds of thousands of dollars the week before the event to build the stage and the infrastructure, and then we move into a level 3 or even a level 2. Some of those events you will never see again because those losses will be significant."
Christmas in the Park among the latest casualties
This week the organisers of Coca-Cola Christmas in the Park cancelled the Auckland event, scheduled for December 11, for the second year in a row. At this stage the Christchurch Christmas in the Park event will still go ahead in late November.
And organisers pulled the plug on the four-day garden festival Garden Marlborough and the Marlborough A&P show. The 30-year-old Hawke's Bay Wine auction was cancelled as were Gisborne's music festival, The Longline Classic, and the First Light Wine and Food festival which were both due to be held at Labour Weekend. In the Bay of Plenty two golf tournaments, the Tauranga Open and The Mount Open, were cancelled.
Gisborne's Rhythm and Vines, and the Rhythm, and Alps music festival in Wānaka are the next big ones, due to begin on December 29. Whether they'll go ahead is anyone's guess, but it's looking increasingly unlikely.
Some district councils have offered support, but in the main event organisers are left shouldering the debt burden. The Wellington City Council is faced with a hefty bailout of the World of Wearable Art Show (WOW) after agreeing to funding support of up to $5m. This year's September show was cancelled due to the pandemic and alert level restrictions.
The New Plymouth District Council agreed this year to underwrite Womad (World of Music, Arts and Dance) for $1.9m in a five-year partnership deal. Womad organisers will only be able to claim compensation if a cancellation is pandemic-related.
Brent Spillane, managing director of XPO Exhibitions, says having an event insurance policy for the industry would be "groundbreaking" and a cost-effective way of mitigating risk. His company has been caught out by the cancellation of several major events very close to the opening date due to alert level restrictions, costing him millions of dollars.
"Those are catastrophic costs that we suffer with no recourse."
Spillane was forced to postpone the Baby Show four times, the last cancellation costing $500,000 in losses.
Hopkins is frustrated at the delays in the Government's response. Two weeks before Delta arrived in what was then a Covid-free New Zealand, she made another plea to Finance Minister Grant Robertson to consider the $1.5m premium payment. Then Delta struck.
"Timing, right? Timing is everything."
But with no take-up from the Government and Delta now in the country, Hopkins suspects the Lloyds syndicates will want to renegotiate the terms anyway.
"This has unfortunately been dragging on for so long we just don't know. In the longer term we're probably going to be a better risk because we are going to be more highly vaccinated than other countries."
Hopkins says the idea of the insurance cover is to encourage organisers of business events, conferences and trade shows to hold tight and reschedule rather than walk away.
"It just would have helped to keep that money churning in the economy, and may have helped some of our third-party suppliers in particular. Those smaller businesses that are really doing it hard in our sector."