As Premiums Soar, Music Venues Are Heading to an Insurance Cliff

When Genesis Owusu made the earth move during his March concert at Sydney’s Enmore Theatre, the story bounced around the world, just as punters did on the carpet that stretched across the floor’s gaping wound.

It was a lucky escape. No harm done, certainly not to Genesis Owusu’s career, which immediately springboarded into an international trek.

For fans, an early end to the night and a tale to tell. And a headache for the team behind The Enmore.

Not all concerts go to plan, not all accidents are followed with lucky escapes.

Public liability insurance is the safety net that covers those potential disasters, an essential overhead that enables venue operators to sleep easy at night.

Now, a different type of nightmare has emerged, this time at the insurance end of the gig economy.

The cost of insuring venues is soaring for small to medium dedicated live music venues, inflated by the perfect storm of fires, floods, the pandemic and war in Eastern Europe.

It’s an insurance cliff, which many don’t spot until it’s time to renew their premium.

How did we get here?

Hundreds of small to medium live music venues around the country are facing closure because insurance companies are no longer offering PLI coverage for live music, or are offering premiums that will force venues to consider their options — either close, dump live music, or run rogue.

“This is one of the biggest issues the live sector is facing right now, but few in the industry are talking about it,” says Stephen Wade, Chair of the Australian Live Music Business Council.

It’s potentially the “most destructive crisis since COVID,” he continues. “Insurers are reassessing their appetite for risk and unfortunately live music has been caught up in that,” he continues.

Wade and the ALMBC have heard from venues who’ve searched for insurance for months without getting a single offer, and others landing an offer that is 10-times their previous premium.

One venue saw their public liability premium soar from $1,500 to $35,000.

Geoff Trio, director of the 140-capacity Brass Monkey, a dedicated live music venue in Cronulla, has felt the sting. He saw the venue’s premium rocket from $6,000 to $32,000, despite operating for over 21 years without ever having a claim against him. “You’re looking at hundreds of dollars a show just for public liability. I don’t understand why,” he tells TMN. “It’s never been a problem before.”

The good, the bad, the terrible

Those activities that were previously considered to be “high risk” are now completely off the negotiating table, say sources familiar with the situation.

To trade without PL insurance, the operators would be in breach of lease agreements which knocks the venue out of business, and, of course, opens to door for litigation from the public.

On the eve of their insurance being due, one venue operator was told to make a tough choice. Either shut the public bar and hotel and operate purely as an entertainment venue or shut the band room and operate as a pub with no live entertainment.

“This is the SLAM of 2022,” says one source familiar with the situation. “There is no way venues will be able to absorb these costs which means many venues will choose not to have a live music offering and those venues who can afford to open will be passing these costs onto bands and promoters in room hire, punters will be paying more for tickets and the costs of a beer to a parma will be substantially increased.”

Newer music venues are not the only ones to be hit, says one major venue, who declined to be identified for this article. “Key live music venues who have been operating in Melbourne for over 30 years with little to no claims have seen their insurance more than double making it difficult to maintain their current prices and encourage other venues to not take for granted they will be renewed.”

Richmond live music venue the Leadbeater Hotel was forced to cancel a show and shut its doors early in recent months after its insurance company rejected a request to renew its cover for the next year.

Speaking to Virginia Trioli on ABC’s Mornings, co-owner Joe Downey said his venue had never had a problem with insurance.

“We just had to close our doors” says Joe Downey, the owner of the Leadbeater Hotel in Melbourne. “We’d been with our insurer for years, without any issues, but when it came time to renew our policy they said they were no longer offering coverage for live music venues… and without insurance, we had to close.”

After a public campaign the Leadbeater found an insurer at the last minute. That’s the good news. The bad, it came at a whopping 1,100% increase, a financial load few operators can carry.

“We’re aware of many more cases like this and have a test group of 30 venues we are working with to try and get a solution over the line – something that will work for the hundreds more we know are in the firing line as their insurance comes up for renewal,” says the ALMBC’s Wade.

The worst-case scenario, he continues, is the collapse of the 100 – 400 capacity live music venue network, which would spell disaster for the nation’s live music ecosystem.

What to do?

Research, for starters. And reach out to the ALMBC, which launched a survey seeking EOIs and insurance detail from venues, for some level of critical mass and specific data on the sector.

With this information, the peak body then intends to approach several underwriters with the proposition to underwrite venues under an appropriate scheme that is both affordable and provides adequate cover.

To get involved in the ALMBC’s insurance project, complete an Expression of Interest form.

“If venues get together behind the cause they may have a hope of getting something over the line,” notes Wade. “If they try and go it alone, it could be a disaster.”