This article is by Marion Jones, Director, Spotlite Claims and it looks at the growth potential and specialised risks in the film and TV production sector.
Insurance providers and their loss adjusting partners supporting the film and TV industry will surely welcome the much-anticipated roll out of the 40% reduction in business rates bills for studios which came into effect on 17th February. This promises to encourage further growth and investment in state-of-the-art facilities at our older, long-established studios and the continued development of new studios, ensuring the UK continues to make world-renowned UK films and TV productions as well as attracting big budget international films. The relief is over the next nine years for UK film studios.
The cut in business rates follows the introduction of Audio-Visual Expenditure Credit (AVEC) which came in to effect in January 2024. This provides companies with a tax credit worth 34% of their UK core qualifying production costs on a film or high-end TV programme, or 39% on an animation or children’s TV programme.
From April 2025, film and high-end TV companies can also claim a credit of 39% on their UK visual effects costs. At Spotlite, we are already seeing an increase in Vfx work being retained in the UK as a result of this new initiative, as opposed to being farmed out to other territories, where historically the available relief has been much higher.
Eligible independent films with budgets of under £15 million will be able to claim an enhanced 53% rate, known as the Independent Film Tax Credit; a real boost for the beleaguered independent sector.
At a base level this suite of new tax breaks should see continued steady growth in the UK film and T sector with a consequent increased demand for insurance cover as projects find investors and benefit from new funding to create the next binge-watch TV series, block-buster or indie-movie. This may see new carriers entering the film, TV and advertising space in early 2025 and suggest a softer insurance market could be on the horizon.
However, growth does not come without risk, especially following on from the departure of many great, qualified crew and production personnel off the back of covid and the recent industry strikes that shut down much production in 2023 and only saw this creep back slowly in 2024.
More than ever, there is a need for effective risk management and specialist claims expertise for this sector of the insurance market. There remains in particular a skills gap in production talent that could create its own risks for Insurers. All the ingredients would seem to be in place for a burgeoning UK film industry, yet a lack of good production managers is seemingly a big fly in the ointment.
Why is this relevant to insurance? Production managers or unit production managers are key problem solvers on any set, they manage the logistics, the crew, they keep the show on the road. A study by Bournemouth University found that there was ‘expectation on production managers to be, among other things, ‘an expert in law / insurance / health and safety’ and ‘to act as unofficial HR/ therapist for the team’…. When it comes to risk management on set – these people are often the ‘go to’ experts.
In the same study, it was found that the skills that consistently head the lists of shortages reported by organisations such as ScreenSkills, the British Film Institute (BFI) and the Work Foundation are those of experienced production managers (PMs). The industry struggles to recruit to the role, and indeed to the more junior production management roles that should provide a pipeline for new talent.
Studio space in the UK has doubled in the last three years and with £25 million funding for a new film studio in Sunderland, the UK is now second only to Hollywood globally. As the UK Government proudly states; the sector has huge potential for further economic growth. It is therefore vital that the production skills challenge is addressed not just because of the insurance implications, though that is important, but because without these skills, the industry may struggle to reach its full potential. Certainly, those of us working closely with the studios in the UK will be keen to learn of and support plans to plug that gap.
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