Live Events and Controlled Drugs Licences – A Worry for Insurers?
Market Insight 20 July 2023 20 July 2023
UK & Europe
Insurance & Reinsurance
In June 2023, shortly before the festival season was due to begin, the Home Office announced that on-site drugs testing at music festivals would require a Controlled Drugs Licence, and that testing must take place at a named, permanent premise. Now event organisers are threatening judicial review, but in the meantime some uncertainty reigns.
The summer festival season is well and truly underway in the UK. Lewis Capaldi headlined Radio 1’s Big Weekend in Dundee in late May, one week after releasing his second album, followed by Elton John’s history-making performance on Glastonbury’s Pyramid Stage, and there is still much more to come.
However, for festival organisers, the season did not get off to a smooth start, and developments will be closely watched by their insurers.
The Home Office announcement that on-site drugs testing would be subject to new criteria was a surprising and unwelcome development to the live events businesses hoping for a smooth summer of events following the upheavals of Covid. Prior to that announcement, and as acknowledged by a House of Commons Report to the Digital, Culture, Media and Sport Committee in 2021, organisations such as “The Loop” could conduct drug testing at festival sites without licences, so long as they had the agreement of local authorities and police forces. The Government had also previously stated that the Home Office would not stand in the way of such “local operating decisions”.
Drug testing at festivals is considered by many organisers to be vital to ensuring the safety of attendees. It allows the prompt identification of high-strength and/or adulterated drugs, which can then be communicated to festival goers by way of push notifications.
Evidence was presented to the Parliamentary committee which suggests that festivals see between a 10% and a 25% reduction in drug-related harm when The Loop operates on site, as well as people adopting more risk-averse behaviour.
The announcement from the Home Office therefore puts festival organisers, particularly those organising smaller festivals which typically rely on unlicensed charities to conduct drug testing, in a difficult position.
According to festival organisers, it may take more than three months to obtain a Controlled Drugs Licence, it can cost over £3,000, and the premises must also be permanent (which they are unlikely to be at a festival). With the festival season imminent at the time of the Home Office’s announcement, it is unlikely that small charities will obtain the required licence in time, if it were even possible for them to do so at all given that they often operate from temporary premises.
This creates a tension with licences for events requiring that the event managers take appropriate steps concerning attendee welfare, and drug taking at such festivals is said to be an open secret. The last reported drug related death at a festival was in 2016, with several in the preceding years, but since that incident much progress has been made, particularly with the help of such drug testing.
Organisers must now therefore consider whether their festivals can go ahead as planned without on-site testing, or whether alternative measures must be implemented to safeguard attendees.
For example, an insured may hire more security to conduct bag and/or body checks as individuals enter the festival, or additional medics to ensure that any festival goers who do suffer an overdose or adverse effects from taking drugs receive prompt medical attention.
Such issues have the potential to translate into increased risk or claims for insurers under event cancellation and public liability insurances.
Any withdrawal of an event licence would likely trigger a cancellation claim under an event insurance, although there can be an exclusion regarding losses arising from an insured’s failure to ensure that all necessary authorisations have been obtained, which is highly fact dependent. It is also worth noting cover might be specifically extended for loss of a key licence, which would need consideration in this situation. Insureds may incur excess costs to avoid a cancellation, which raises complex legal issues itself.
If a festival organiser does not take additional steps to ensure the onsite safety of those attending the festival, there could be an increased risk of an allegation of failure to take reasonable care and/or ultimately a finding of legal liability, should a tragedy occur.
Although losses arising from an insured’s deliberate, conscious or intentional failure to take all reasonable steps to prevent injury or harm are often excluded under public liability policies, questions will arise as to whether any such failure was “conscious”, and what was “reasonable” in the circumstances.
The Home Office’s announcement has been challenged by The Night Time Industries Association (the “NTA”), in partnership with a number of other organisations, individuals and MPs, which threatened to launch judicial review proceedings if a satisfactory response was not received by Friday 7 July 2023. As at the time of writing, no response has yet been published by the Home Office, and it remains to be seen whether the NTA will launch a judicial review. In the meantime, however, insurers of UK festivals would be well-advised to remain apprised of all developments in this matter.