Rising cost of public liability insurance now impacting entertainment venues

The rising cost of public liability insurance, which has already impacted other industry sectors, is currently seeing hundreds of music and entertainment venues across Australia facing steep increases in the cost of their premiums.

Still recovering from the effects of pandemic lockdowns, the Australian Live Music Business Council (ALMBC) says venues across the country are at risk as a result of massive premium increases - with some venues denied coverage all together.

Citing one venue as having been invoiced nearly 10 times their previous insurance premium, ALMBC Chair, Stephen Wade told the ABC “this isn't just three or four venues - this is hundreds of venues around Australia.

"When they've gone to get their public liability insurance renewed, they've been faced with huge increases - sometimes up to 1,000% above what they would normally do, and there's some venues that just haven't been able to get it at all."

Wade said small and medium venues are considering shutting down as a result of the premium rises, noting "these venues are the absolute bedrock of the industry.

"Every artist you could name - the greatest artists from Midnight Oil, INXS and iconic Australian artists, all the way through to our current huge artists that are taking over the globe - all of these artists start in small venues.

"It would be cataclysmic if these venues were forced to shut down or weren't able to afford insurance to move forward."

With extreme weather events, financial market conditions and scarce capital having created a ‘hard’ global market for insurers, with many shedding more risky prospects from their books, Insurance Council of Australia (ICA) General Manager of Public Affairs, Mathew Jones, said live music venues were an unfortunate casualty.

Jones stated “insurance prices risk and the activities we're talking about are inherently riskier than other types of leisure activities.

"There's alcohol involved, large numbers of people in tightly packed venues, activities taking place at night rather than the day."

Explaining that public liability insurance claim amounts were determined through the court system - and every claim has the potential to take a heavy toll on an insurers' margins, Sean Bemrose, Managing Director at Tony Bemrose Insurance Brokers, declared "generally, insurers continue to see costly claims and fewer are getting a return on their investment.

"Due to previous loss experience, a number of insurance providers have also ceased offering public liability insurance cover to certain sectors of the hospitality industry.

"A number of insurers have chosen to leave the market, which has a flow-on effect to costs."

The ALMBC, which has been urgently meeting with brokers and the ICA to find solutions, is currently encouraging venue owners to come together to design a Public Liability Insurance (PLI) scheme that offers coverage for those venues that have been unable to secure insurance as well as attempting to reduce premiums.

Wade advises that more than 100 venues have indicated their interest so far.

He comments "we have the option, with some buying power, to be able to approach those insurers and hopefully go back to these venues and give them some scope - and most importantly, hopefully get them some insurance that will enable them to continue to operate.”

Moves have included working with the ICA to help venues learn how to "de-risk" their dancefloors.

No respite for attractions and amusement industry
The insurance crisis in the Australian attractions and amusement industry is showing no signs of easing.

Having been pushing for the creation of an industry-initiated discretionary mutual fund (DMF) of almost a year, the Australian Amusement, Leisure, and Recreation Association (AALARA) is understood to still be in discussion with Federal Government representatives in its quest for start-up capital for the fund.

On the ground, media reports have advise of ride and attractions operator being forced to withdraw from the Royal Adelaide Show and Perth Royal Show because they could not secure appropriate insurance.

AALARA Vice President Damian De Jong said the amusement industry runs with only around 70% ride capacity, threatening family-owned amusement businesses.

As reported by Lismore City News, De Jong recently advised “my kids now are starting to think about other things to do when this was the perfect opportunity for them to take over the next generation.”

Images: The cost of public liability insurance is rising for hundreds of music and entertainment venues across (top, credit: Shutterstock) and the floor collpase at Sydney's Enmore Theatre during a Genesis Owusu show in March is the type of incident contributing to rising insurance premiums (below, credit: Dean Vardon/@roti793).