As state governments work to rebuild ‘vibrancy’ and the night-time economy, the skyrocketing cost of public liability insurance threatens to stop the music before it begins.
The Pride of our Footscray is a pub in Melbourne that opened at the start of 2018, licensed to hold 200 people. It provides live entertainment in the forms of live music, theatre, drag and burlesque shows, and a host of general events, such as stand-up comedy, movies, poetry nights and art classes.
It has maintained a five-star liquor licence and has not had a public liability (PL) claim since its opening, incorporating safety measures despite any effect on revenue. In 2020 the venue paid $6,270 for its PL cover.
But for its 2024 policy the best rate available was nearly $143k, or $157,179 with finance, as 18 other insurers declined to offer any cover at all. This represented an increase of more than 2100 per cent.
Separately, the landlord’s building insurance was cancelled, in 2023, under justification that Pride’s business fell outside the “underwriting guidelines” of the insurer.
In light of the broader situation the Federal Government formed a Parliamentary Joint Committee to investigate small business insurance, which ran from October until 6 March this year. Submissions entered are available to the public.
Pride posted a submission, where CEO Mathew O’Keefe suggests insurers are leaving the PL market by the back door, not declaring their stance to government or industry as they deny what are mandatory measures for venues. He points to this as government policies in the eastern states attempt to build back the arts and night-time economies post-COVID.
O’Keefe believes there should be “An investigation into how insurers dealing in an essential service can be allowed to raise premiums by over 2,000 per cent in some cases, or just decline to insure, without warning or consultation”.
The Pride submission submits insurers are discriminating against particular venues or music genres, and reportedly don’t want patrons dancing. O’Keefe mocks perhaps they would prefer “a string quartet”.
Central to the issue, Pride insists insurers have dismissed the history of its safety record and risk management procedures.
“Our experience illustrates a systemic market failure rather than a venue‑specific risk issue.
“Premiums and underwriting decisions have become disconnected from claims history, compliance status and demonstrable risk controls.”
Stakeholders in the discussion have posed alternative options to the statutory scheme could see a discretionary mutual fund or model operated by the private market but with public protections. Emergency bridging funds could assist until a new arrangement is formed.
Frustrated by the bureaucratic bind, O’Keefe offers a glib solution for the excessive caution of insurers.
“It may be best if the government places a nationwide ban on dancing, and we can all rest peacefully in the knowledge that ‘slip and fall’ incidents on dancefloors will be a thing of the past.”
