Calls for government-backed pandemic insurance scheme to protect businesses
An MPs report has called for the creation of a government-backed insurance scheme to give the hospitality and events industries a safety net in case of future lockdowns.
Thousands of businesses have been unable to claim for Covid-related disruption after discovering their insurance policies did not provide cover, and many others are still waiting for pay-outs.
Now a group of 40 cross-party MPs is urging ministers to intervene after some late-night operators reported facing a 300% rise in the cost of their premiums since the pandemic began.
The All Party Parliamentary Group (APPG) for the Night-Time Economy said a government scheme to underwrite insurance could give businesses the confidence to reopen and take bookings without worrying about future lockdowns.
One method proposed by the Night-time Industries Association (NTIA) and insurance broker NDML is the creation of a reinsurance scheme similar to those used to underwrite flood and terrorism policies.
Flood Re and Pool (terrorism) Re are funded by a levy on insurance companies and provide a guarantee that losses will be covered while keeping costs down for customers. The government commits to providing funds if there is not enough to compensate all policy holders in the event of a disaster.
The NTIA and NDML have suggested creating a c.£7b crisis fund from the existing flood and terrorism schemes. This could sit alongside traditional insurance cover to provide a safeguard for businesses in the event of exceptional circumstances declared by the government.
NDML estimates that if such a crisis fund had been in place since 2010, it would have provided each hospitality venue in the country affected by Covid-19 with a one-off payment of £56,038.
The APPG report said: "A government scheme to underwrite insurance is therefore essential to give organisers and investors the confidence to fund festivals, live performances and events for the summer 2021 and beyond.
"This is particularly important to protect the industry from ever-changing lockdown measures that appear to be implemented with little to no notice."
Hospitality insurance specialist Steven Swift of Sector Associates previously told The Caterer that he believed there was scope for specialist pandemic cover, but it was several years away.
The APPG is also calling on the government to intervene to ensure valid business interruption payments are made swiftly and correctly within a set timeframe.
To read the full report, click here.
