Question Period Note: The unavailability of insurance to cover COVID-19 related production stoppage

The COVID-19 pandemic has caused the shutdown of film sets in Canada and around the world since mid-March. Consequently, according to data obtained from the various associations representing production companies in Canada, more than $100 million has been disbursed by insurance companies due to the cessation of the filming of audiovisual productions. As a result, insurers have decided to no longer offer pandemic coverage (e.g. key personnel affected by the pandemic or a shooting stoppage due to a second wave of the pandemic). Since obtaining financing (public and private) for audiovisual productions is conditional on projects having insurance, this lack of coverage means that a large part of the sector is on hold, despite the resumption of various economic activities in the country.

• The audiovisual industry in Canada is a major source of economic activity and jobs for Canadians across the country. Our Government is proud to support the Canadian film industry as they play an important role in the social, cultural, and economic development of our country.
• We take the challenges facing the audiovisual sector very seriously and this is why we have announced a short-term compensation program to compensate for the lack of insurance and allow the resumption of audiovisual production activities in the country.

• The Short Term Compensation Fund represents an investment of $50M. Maximum compensation will be $1.5M in the case of temporary interruptions and $3M in the case of production abandonment. This measure will, among other things, keep tens of thousands of workers and artisans at work and generate hundreds of millions of dollars in economic activity.

• The exclusion of pandemic risks from insurance policies is currently one of the most important obstacles to overcome in order to allow the resumption of activities in the audiovisual production sector. If nothing is done to remedy the situation, the impact on the industry and the economy could be dire.
• To make a production, a producer (through his/her production company) finances it by selling exploitation rights to funders, including distributors, broadcasters and online platforms. These funders release payments as the production progresses. Production companies need money to start production and to pay their staff, rent equipment, etc. To do so, they borrow an advance for a large percentage of the production costs (interim financing) relative to the various financing agreements entered into with its lenders, in addition to proof of insurance coverage.
• Within the audiovisual industry, the availability of financing from private and public funders is often contingent on production companies being appropriately insured for their audiovisual projects. The lack of certainty around insurance has meant that even as the economy begins to open up, much of the audiovisual production sector is on hold.
• In the absence of an immediate solution, the industry will not be able to fully resume operations, which could jeopardize its survival because the vast majority of Canadian independent producers do not have the financial capacity to absorb losses from a long term shutdown.
• The Department introduced this temporary measure to compensate for the exclusion of risks associated with the pandemic from insurance policies. This measure aligns with that put forward by countries such as the United Kingdom, Australia, Belgium or France. The proposal is still under analysis and discussions between Canadian Heritage and the central agencies are continuing.
• The Canadian government plays a key role in maintaining a dynamic audiovisual industry in Canada, injecting more than $900 million each year through Telefilm Canada, the National Film Board, the Media Fund of Canada and the tax credit programs, which the Department administers jointly with the Canada Revenue Agency.
• In 2018-2019, Canada's production volume reached a record high of $9.3 billion and created 180,900 full-time equivalent jobs. Canadian content production alone accounted for $3.22 billion of total production volume and created 62,700 full-time equivalent jobs.
• Canadian audiovisual production industry associations estimate that a large number of productions, with a total value estimated at one billion dollars, are at risk. The Short-Term Compensation Fund for Canadian Audiovisual Productions (STCF) is being introduced to address this problem.
• Administered by Telefilm Canada, the STCF will compensate independent production companies following the interruption or abandonment of an eligible audiovisual production due to the emergence of confirmed cases of COVID-19 on production set. More details on the coming into force of this new Fund and the terms and conditions will be communicated by Telefilm Canada in the coming weeks.
• The Government is committed to mitigating the impact of COVID-19 on the creative industries. The measure announced today is in addition to measures already announced such as the Emergency Fund for cultural industries.

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