COVID Crisis Task Force Working To Resolve The “Scandal” Of Production Insurance
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EXCLUSIVE: “The single biggest obstacle to getting back to work is production insurance,” the head of UK producers group PACT has told us.
PACT chief John McVay has been working with broadcasters and leading production firms as part of the BFI’s coronavirus task force, which was set up in response to the pandemic. McVay is chairing the domestic broadcasters working group, which has identified insurance as a key concern. We understand the group includes leading TV execs such as All3Media COO Sara Geater and Argonon CEO James Burstall.
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“How can we even conceive of social distancing protocols if we can’t get insurance?” McVay questioned (yesterday we revealed details of the task force’s production protocols plan), noting that studios and streamers generally operate on a different plane than UK indies when it comes to insurance.
“If you’re a big U.S. studio, you’re big enough to cover that insurance yourself. If you’re a British drama or film producer how can you start work – even with protocols – if you can’t get insured? Ultimately, we will get the protocols sorted. My biggest concern is whether we can insure production.”
The UK production sector generates billions of pounds in spend each year but all shoots have been suspended since the UK government implemented a lockdown last month.
McVay, who reps more than 450 British film and TV production firms, has been in talks with the UK government about the insurance issue, calling on them to underwrite insurance shortfalls.
“Right now, none of the insurers will cover COVID-related problems,” the industry veteran claimed. “That’s a scandal and I’ve been raising the matter with government since the lockdown started. The insurance sector is what will drag back recovery. How can a producer go into production on a major project if the cost of suspension or termination would fall only on them? It would bankrupt them. Broadcasters won’t cover the cost. Financiers won’t put money into something that isn’t bonded. The government needs to help. Sometimes the state needs to step in to underwrite the risk.”
One leading UK film and TV producer told us, “It will become much harder. The bond companies and insurers will want to exclude those clauses which will make financing more difficult.”
A spokesperson for the government told us, “We are aware of this issue and are working closely with the sector to understand the full extent of concerns. The Government recognizes that businesses who do not have appropriate insurance cover will require support from elsewhere. As such, businesses should look to the package of unprecedented government support that has been out by the Chancellor.”
A spokesperson for the Association of British Insurers commented, “Unfortunately, no country in the world has an insurance market that is able to offer widespread pandemic cover. Forcing insurance companies to pay for risks that aren’t covered in contracts would be a shortcut to their insolvency. Given the sheer scale of economic impact, extensive pandemic insurance cover can only happen with some form of government support, and we need a debate about how this can best be achieved in the future.”
McVay is one of a growing number of industry professionals to claim that insurance companies are reneging on pandemic-related pay-outs.
“There are existing policies that aren’t being paid out,” he said. “We’ve had members who have had to spend hundreds of thousands to suspend production and they aren’t getting that money back.”
The ABI spokesperson said, “Insurers understand that this is a very worrying and uncertain time for all businesses. Each claim will be examined on its merits by the insurer according to all the policy wording and we can’t comment on any specific insurance contract.”
They continued, “While most business insurance does not cover for pandemics, overall UK insurers expect to pay over ￡1.2b in Covid-19 related claims. This includes travelers, some businesses, cancelled school trips, event organizers, families organizing weddings and in other areas of life.”
We’ve heard from one UK media company that has appointed top UK law firm Mishcon de Reya as its lead counsel in a legal action against UK insurer Hiscox.
Communications and production firm Media Zoo claims it spent ￡13,425 on a business interruption insurance policy but that, after it had to close its facilities, the insurer has not paid out.
Media Zoo Creative Director Mark Killick said, “The policy terms are clear and unambiguous. Hiscox refusal to pay out on legitimate insurance claims at a time like this is shocking and threatens businesses across the UK.”
The company has set up the Hiscox Action Group, which it says has more than 200 members, including other media firms. Separately, there are also similar actions being worked on by nightclubs, pubs and bars over non-payment of of claims.
Hiscox was unavailable for comment.
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