British theatre at risk due to ‘inadequate insurance cover’

British theatre is on the brink of collapse after having failed to secure business interruption payouts as well as theatre producers having limited or no cover to protect against pandemic risks.

This is according to research from not-for-profit organisation Society of London Theatre (SOLT) and UK Theatre, which indicates that 70% of theatres could run out of cash by the end of the year.

SOLT and UK Theatre is currently in talks with the Department for Digital, Culture, Media and Sport (DCMS) and the Treasury about the issues in obtaining appropriate insurance to enable the sector to reopen while considering the risk profile of the pandemic.

As it stands, some 12% of surveyed organisations believed they would not be able to get the insurance they need to re-open.

SOLT told Insurance Times: “Theatres and producers are set to suffer significant losses from closures to date, albeit mitigated a little by the government’s support schemes. But with these support schemes ending, the bigger risk is whether shows can re-open without Covid-19 cover in place in some form. Feedback from the industry is that in the main they will not be able to, and therefore many may not survive.

“Across the country, over 34 million people visit our theatres each year generating ticket revenue of £1.2bn. Currently, we have no audience and no income.

“Whilst strict social distancing measures are in place, live entertainment simply cannot return. It is impossible for theatre workers, whether on stage or backstage, to do their jobs while keeping two metres apart. Nor is it possible for an audience to enjoy the performance whilst maintaining the same distancing.”

Moreover, job losses in theatre for permanent and freelance roles are likely to hit 200,000, which equates to more than 70% of the sector, and could rise even higher.

And despite the government recently issuing a five-step roadmap for the phased return of live theatre and music events, many in the industry have deemed the plan useless as it lacked dates, data and funding.

Out of business

SOLT suggested underwriting production insurance and temporarily extending the Theatre Tax Relief scheme to support the reopening of theatres and productions and save the industry.

Some theatres in Leicester, Southhampton and Southport have already gone out of business, meanwhile others such as the Birmingham Hippodrome and Delfont Mackintosh Theatres are in the process of redundancy consultations.

Oxford Economics predicts that the theatre industry will lose £3bn this year.

Theatre venues typically have business interruption insurance in addition to a standard property, public and employer’s liability cover.

Theatre producers who put on the show and hire the theatre from the venue owner, usually have cancellation insurance in addition to the standard covers.

But these policies have proved to be of little use as many theatres are still taking on insurers regarding claims. 

Half empty

One of the issues facing the theatre industry, however, is that commonly their venues do not have the required space to operate safely under social distancing measures.

“Many of our theatres are listed buildings and do not have the space to implement social distancing and even in situations where it may be possible to implement these measures, theatres need to sell at least 60-70% of their tickets to merely break even,” SOLT said. ”Producers simply cannot support the costs associated with staging shows with half-empty theatres.

“Theatres require a safety-first protocol that could be adopted across the sector. We want to ensure our audiences, actors, performers, and staff feel safe and secure when they come into theatre in the future. This will require investing in health and safety precautions like personal protective equipment, toilet facility changes, and increased costs of working.”

Nevertheless, SOLT said that it is a priority for them over the coming weeks and months to develop a plan for safe reopening of theatre venues, and it has welcomed the establishment of the Entertainment and Events Working group to develop blueprints for how and when closed businesses and venues can reopen safely.

Refund protection uptick

Despite the issues facing the theatre industry, there could be light at the end of the tunnel.

Data from refund specialist Booking Protect, part of broker Romero Group, found that between 8-14 June this year a total of 10,055 advanced tickets were sold, an uptick of 292% within two months, and 37% of these ticket purchasers bought refund protection.

This is compared to April when just 2,585 tickets were sold, with Booking Protect putting this uptick in ticket sales down to people missing live entertainment from theatres and entertainment venues during the nationwide lockdown.

In a blog statement on its website, Booking Protect added: “It is also interesting to note how the pandemic may have influenced people’s attitude towards refund protection.

“Over a third of purchasers are seeking additional security and peace of mind, perhaps indicating the increasing need for venues to reassure and support customers as individuals begin looking to book for future events.”

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