A global pandemic and widespread public unrest: The film and events industry’s nemesis
With the media and entertainment industry still reeling from the devastating effects of the imposed travel restrictions and lockdowns ensued by the global pandemic, the economic brunt borne by this sector is still widely visible. On 5 March 2022, we will mark two years of the pandemic in South Africa, with an entertainment industry yet to find itself on a pathway to full recovery.
Specialist Film and Entertainment Underwriting Managing firm, KEU Underwriting Managers (KEU), a provider of non-life insurance solutions to the film, television, and event industry, recently released their findings on Covid related claim statistics, the pandemic’s impact on the local and international market, as well as industry related trends. These findings provide a glimpse from an insurance outlook and amplifies the widely reported loss this industry has suffered since 2020.
Covid Related Claims: Local and International
The international market reported an overall loss of ?6.5 billion for Event Cancellation claims, compared to the annual income of ?500 million, which resulted in a 1300% loss ratio. Locally, the lockdown restrictions also lead to an increase in event cancellations, including some of South Africa’s biggest and most anticipated annual events. To date KEU has paid a total of R 83 million in covid related claims, including pending payments which mainly consists of flight tickets.
Statistics and its Effect on the Market
During the seminar KEU revealed the 2020 annual policy statistics for their market, as well as its impact on the events insurance sector. The overall policy refunds paid in 2020 totalled to R2.3 million. In regard to policy cancellations and lapses, two hundred and thirteen policies either lapsed or had to be cancelled, resulting in a total income loss of nearly R38 million: painting a dismal picture for the industry at the time.
Event vs. Film Industry - Effects and Trends
When comparing the event and film industries, the following trends were evident. Regarding claims, the event sector suffered immediate losses, whereas the film industry experienced claims when nominated artists contracted the virus. In terms of recovery, the events industry has not yet recovered to its pre-covid state, whilst local productions enjoyed a much quicker recovery compared to its international counterparts, which has only recently started to recuperate. In the case of events, KEU’s findings also revealed that many of its clients’ events had to be cancelled indefinitely. For those clients who couldn’t postpone their events at the time, policy extensions and refunds were provided. For the film industry, most production shoots managed to finish filming, following a hiatus during hard lockdown. The insured in this instance received policy extensions at no additional charge. The lockdown restrictions also saw an increase in virtual events, although event liability is restricted in this instance, this innovative format also presented its own sets of challenges, for example transmission failure. The film industry also needed to adapt its pre-covid buffet style catering to meet Covid regulatory requirements, which saw a shift to pre-packed catering that also didn’t come without problems, for example, limited-service providers due to lockdown as well as packaging costs. Another financial impact that the film sector was faced with, was the fact that a decrease in crew members did not mean a decrease in budgets. This ultimately meant that production needed to proceed with fewer crew members, whilst budgets remained unchanged. Covid protocols, such as the sanitizing of equipment and props, also increased the risk of loss as it posed a fire hazard.
Aside from the losses suffered due to the pandemic, the June 2021 riots and strikes further wreaked havoc and added financial strain on this crippling sector. Although the event industry did not report any losses, the film industry suffered another major setback, with claims exceeding the total covid related claims.
Despite the industry enduring severe ramifications of both the pandemic and the riots, KEU’s Managing Director, Denise Hattingh, shared her optimism about the future and to see the gradual revival of the local and international entertainment industry.
To watch all the sessions of the KEU 2022 Seminar, please click here...
