Bouncing back by focusing on risk
The shortage of experienced workers for live events has increased the potential for accidents and cancellations. And after the massive number of event cancellations in 2020 led to major losses for insurers, rates have risen across the board.
Strong risk management will keep venues open and patrons coming through the door.
Live music events are thriving and indoor venues are opening for live performances
At the start of 2020, high-profile instances of catastrophic weather, attacks on events and harassment claims had already raised the entertainment industry’s risk profile.
COVID-19 made those events seem like minor plot points in a movie about natural disasters.
It’s a sore spot in an environment of recovery. Music tours and festivals are thriving, many sporting events are at full capacity and indoor venues are opening for live performances, although with more restrictions, like vaccine mandates and masks for sporting events and shows in certain jurisdictions.1
The increase in activity will carry on through 2022. But nobody is saying that things will be the same in 2022 as they were in 2019. COVID-19 risk for artists, casts and crews still threatens the viability of some events.2 The shortage of experienced workers increases the risks of accidents and cancellations.
1 Global News, “Covid-19: Rogers Centre, Scotiabank Arena among Ontario facilities to see major capacity limit increase,” September 24, 2021.
2 U.S. News & World Report, “Reopening of 'Aladdin' on Broadway Halted by COVID-19 Cases,” September 30, 2021.
Here’s what to expect for entertainment and live events in 2022:
The shortage of skilled labour has increased risk in producing live events
Strong hiring and retention strategies will be essential to attract and keep skilled employees
1. The show will go on, but with caution
The global labour shortage shows no signs of relenting, and the entertainment industry is feeling the pinch.
A report revealed significant loss of revenue in the Canadian film industry, including revenues falling 60%.3 The independent music scene alone has seen a drop in revenue of more than $200 million.4
Even though demand has picked up for skilled labour in live events, there are not enough people to fill positions, and those who come back to the industry may be rusty. Skills may have eroded from the time off — retraining crews can help ensure construction safety, whether that’s for building sets at a small venue or giant stages for music tours.
Also at issue is having employees who are healthy and able to minimize risk, whether that’s COVID-19 or ensuring the safety of physical assets.
To reopen safely, venues will need experienced, healthy workers who can enforce COVID-19 safety rules and maintain venue safety to keep other workers, performers and patrons safe.
Improved hiring and retention strategies — which may involve higher pay, improved employee benefits, developing a career path for all employees and simply making the workplace safer — will become 2022’s rallying cry for reducing the risk that comes with the labour shortage. Strong employee wellness initiatives can help frame and deliver such strategies.
3 Financial Post, “Posthaste: Canada’s arts and entertainment sectors left reeling from pandemic’s massive financial hit,” August 18, 2021.
4 Canadian Independent Music Association, “New Report Outlines Devastating Impact of COVID-19 on Canadian Independent Music Industry,” December 10, 2020.
Event cancellation coverage premiums will rise at least 20% — and probably more
2. Protecting against event cancellation will be difficult
Insurers of live events suffered enormous losses in 2020 due to COVID-19, as the industry shut down entirely. Rates in 2021 went up and availability declined.
And despite all the precautions the live event business has taken, 2022 will see escalating rates, less capacity and long approval periods. At a minimum, event cancellation coverage premiums will increase at least 20% but probably a lot more. Umbrella or excess liability insurance premiums are likely to have similar increases.
Other coverages for entertainment and live events are also rising: Property insurance is likely to rise 20% (or more) for properties in catastrophe-prone areas, and cyber insurance premiums are likely to rise 20% or more, as increased online sales of merchandise and ticket sales has created more exposure.
Strong risk management will be essential for keeping rates in check. Not only must live event planners and venue owners have strong COVID-19 policies, but it’s important to show venues are safe. Strong cybersecurity is a minimum to getting cyber insurance. And screening potential employees and training new hires will also help show insurers that a venue or event is taking a serious approach to risk management.
Virtual events could become a viable option for meeting pent-up demand
3. In a creative field, creativity in event planning will prevail
The pandemic has challenged the industry’s resilience, prompting a big show of ingenuity in the search for ways to move forward while minimizing risk.
The challenge of staging shows safely has led some to parking lot venues that can hold one-and-a-half times the attendees than smaller, more traditional indoor venues. Federal grants have bolstered these efforts.
In addition, new businesses aim to pick up the slack with virtual events. For instance, one company makes digital avatars of real performers for “digital-native” concerts.5 Another startup seeks to leverage technology to make livestreams more of a concert-going experience than a simple video feed.6
The ability to create new revenue streams will be critical in 2022. Virtual events could become a viable option for meeting pent-up demand with less risk. These performances are less likely to be cancelled, whether for COVID-19, the weather or labour shortages, and could prove to be a cost-effective alternative to live performances.
5 TechCrunch, “Wave opens the door for musicians looking for a ‘metaverse’ beyond Fortnite,” June 10, 2020.
6 TechCrunch, “Flymachine raises $21 million to build a virtual concerts platform for a post-pandemic world,”July 14, 2021.
Moving forward in 2022
The new normal in live events will feature vaccine requirements for employees, patrons and even performers. Creative promoters will use technology to live stream events in new ways. Event organizers and venue owners will improve hiring practices, training and venue layout to reduce risk.
In an industry that has been decimated but has such high pent-up demand, 2022 could be a banner year for those in the live events business. Managing the risks involved will keep those banners flying.