1. The show will go on, but with caution
The global labor shortage shows no signs of relenting, and the entertainment industry is feeling the pinch. Nosediving revenues led to furloughs and layoffs and an unemployment rate among motion picture and music industry workers of 6.4% in December 2020, compared with 1.9% a year earlier. The concert industry alone took $30 billion in losses.
Even though demand has picked up for skilled labor in live events, there are not enough people to fill positions, and those who come back to the industry are rusty. Skills may have eroded from the time off — retraining crews can help ensure construction safety, whether that’s for 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.
The lack of trained labor has also hurt venue management. To reopen safely, venues will need experienced, healthy workers who can enforce COVID-19 safety rules and maintain the safety of physical assets to keep other workers, performers and patrons safe.
Improving 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 labor shortage. Strong employee wellness initiatives can help frame and deliver such strategies.
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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 in 2022. At a minimum, event cancellation coverage premiums will increase 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 will rise as much as 20% 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 have 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.
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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 outdoors 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 their 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. Another startup seeks to leverage technology to make livestreams more of a concert-going experience than a simple video feed.
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 canceled, whether for COVID-19, the weather or labor shortages, and could prove cost-effective alternative to presenting live performance.
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4. Proof-of-vaccination requirements may result in more events
Instrumental in reopening live entertainment was requiring proof-of-vaccination to enter live events in certain states.
Some arenas required vaccination proof and also set up COVID-19 rapid tests, and savvy marketers incorporated the requirement into their marketing: 1,000 free passes to the first 1,000 to get vaccinated, for instance.
However, there has been little pushback from artists, venues and fans, giving promoters the ability to ensure live events are safer through vaccination requirements.
For example, the outdoor Lollapalooza music festival in Chicago required proof of vaccination or a COVID-19 negative test before entry. Notably, more than 90% of festivalgoers were vaccinated and only 203 cases of the virus were traced back to the event’s 385,000 attendees.
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2022 growth & beyond
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.
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At the start of 2020, the live event business already had major issues related to risk management and insurance, ranging from catastrophic weather and attacks on events to cyberattacks and harassment claims.
COVID-19 made those risks 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 reopened Broadway shows in certain jurisdictions.
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. The shortage of experienced workers increases the risks of accidents and cancellations.
Additionally, 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.
The above slideshow reveals what to expect for entertainment and live events in 2022.
Peter Tempkins is managing director for HUB Entertainment Industry Solutions, a fast-growing risk management and insurance brokerage focused on client collaboration with the goal to assess, manage, mitigate and insure against risks. He has extensive insurance experience in all aspects of the music industry from concerts to festivals.
This article originally appeared on the HUB International website as part of its 2022 outlook. It is reprinted here with permission.
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