While the Covid pandemic has caused huge disruption and damage to a range of sectors, the events sector has been particularly hard hit. To understand how the sector has been affected and how insurers have responded to clients in crisis, Tokio Marine HCC brought together a group of the leading Media, Film & TV and Events brokers in the market to hear some stark truths and highlight some hope for the future.
The UK events sector employs around 700,000 people and generates £70 billion in revenue every year. It is a huge contributor to UK Plc, but that contribution was pretty much wiped out overnight when social restrictions to curb the spread of the pandemic started to come into play.
While many were able to pivot to online events, many pre-arranged events had to be cancelled at high costs and disruption to operators. One broker at the round table explained that half of their clients nearly went bankrupt last year, but while many are getting back on their feet this year, the support provided by insurers to get to this recovery has been patchy to say the least.
Brokers reported that while some insurers provided full refunds to operators that had cancelled events, others played “hardball” and refused to return any premiums. The response from brokers was ominous for those inflexible insurers: we just won’t use them in the future when business returns.
Those insurers who played hardball are not just outliers within the insurance industry. As one broker pointed out, a particular client had to cancel a 20,000-capacity event supported by 200 suppliers. Every single supplier refunded and repaid deposits. The only one who didn’t? The insurer.
This response has led to a lot of frustration, anger and a feeling of injustice among brokers towards these insurers. But for those that look to build long-term relationships with brokers and are prepared to take the rough with the smooth, the message is much more positive. In this respect, brokers appear to be like elephants—they don’t easily forget those who supported them and those who didn’t.
There is an understanding within the broker community, however, that insurers are not immune to the pressures brought by Covid-19 and that they have to respond in terms of rate increases or changes to cover levels.
Brokers understand that some changes are unfortunately necessary, but ultimately, they are the ones who have to communicate the bad news to clients. Overall, there was a universal plea for greater transparency in communication from insurers.
As one broker said: “If you are going to say no or hike premiums massively, then provide the broker with the full justification for why to help them in their relationship with the client.”
In addition, many brokers have never had to navigate a hard market before, so insurers providing clear rationale about their underwriting decisions doesn’t only help clients understand, it helps brokers get their heads around it too.
While it may appear there is a negative feeling from brokers, their points are valid, well-considered and should act as a stark warning to those insurers who turned their backs on brokers and clients when the chips were down.
The importance of long-term, sustainable relationships has certainly come to the fore during this global crisis. It is the way we have always worked at Tokio Marine HCC, even when it meant losing market share in the depths of the soft market, but the sentiment expressed by brokers around the table validates that approach.
For us, it is the only realistic way of trading. It’s the only way to ensure consistency—not just for us, but for brokers and their clients. Furthermore, it is the only way that, collectively, the industry can start to repair some of the reputational damage that has been inflicted over the last two years.
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