Reduce the risk: brokers urged to help pubs and clubs as liability premiums soar

Brokers with late licence and live music venue clientele are urged to play a more active role in helping clients reduce liability risks as the hospitality industry faces a sharp increase in public liability insurance premiums.

Hospitality and music sectors, many of which are continuing their recovery from covid-related restrictions and lockdowns, are now facing soaring premiums that pose a severe risk to the financial security of venues such as nightclubs and pubs.

MD of Tony Bemrose Insurance Brokers Sean Bemrose says the music venue and late licence industry has “borne the brunt” of a hard insurance market that has seen underwriters becoming weary of providing cover for risky sectors.

Mr Bemrose says the hard insurance market has only exacerbated an existing problem for the industry.

“Historically this industry segment by virtue of the occupation – large groups of people in close proximity, service of alcohol/ patron inebriation, exuberance of patrons, slip and fall risk, dance floors, dimly lit premises, late operating hours and need for security staff to be present – has presented liability insurance underwriting challenges to provide a profitable, client-affordable and sustainable offering,” Mr Bemrose said.

He says the ongoing risk of insurers facing significant legal costs associated with public liability has caused a mass exodus of coverage for the hospitality industry.

“Unfortunately continued underwriting losses fueled by claims frequency and severity and exposure of the insured to vicarious liability personal injury claims has led to a number of insurance markets withdrawing from the hospitality, late licence and live music venue public liability insurance market,” Mr Bemrose said.

With limited insurance options, rising premiums have added a new dilemma for many businesses, particularly those operating within narrow profitability margins.

The Insurance Council of Australia (ICA) says it has been engaging in conversations with impacted organisations, including the Australian Live Music Business Council, to explore ways to improve access and affordability for licenced venue operators.

Mr Bemrose says it is important that venue owners recognise potential liability risks early on and have appropriate surveillance to ensure a fair assessment of potential liability cases.

“It remains in the interests of the venue operators to provide a safe and enjoyable environment for their patrons and to proactively manage and address hazards in premises and potential areas of patron conflict,” Mr Bemrose said.

“Should this lead to reduced claims frequency, severity and subsequent compensation payouts it can be expected that we may see some premium relief and the entrance to the market of additional insurance underwriters which would enhance market competition.”