Live music groups and the insurance industry detailed the impact of rising claim costs on the affordability and availability of coverage at today’s session of an inquiry into challenges and opportunities in the concert sector.

Insurance Council of Australia regulatory and consumer policy GM Alexandra Hordern told the federal House inquiry there are “no simple solutions” on affordability issues, noting premiums for public liability cover have increased more than 40% since 2015, according to the Australian Prudential Regulation Authority. 

She said the rise coincided with a 30% increase in public and product liability costs from 2014 to 2021, with many domestic insurers viewing live music as an “unprofitable proposition”. 

“Insurers, ultimately, are in the business of pricing risk, and any actions to reduce the frequency and severity of injury claims will assist with reducing premium prices, as well as attract insurer capacity back into the live music market,” Ms Hordern said.  

She played down the possibility of a mutual insurance option for the industry.  

“In this live music market, the reason that domestic insurers are not writing a lot of coverage is because it is not profitable, because of that very small premium pool and very high risk,” Ms Hordern said.

“If a mutual is being proposed on the basis of an assumption that those businesses will be able to get much lower insurance premiums because ... profit is taken away, that is often not the case and that needs to be considered as part of the discussion around mutual.”

She also outlined complications a mutual could face ensuring consistent standards across the industry.

“Mutuals are particularly effective where an industry has a significant span ... and very tight control of the operations of the members of that industry,” she said.

“Where you’ve got a disparate sector with varying degrees of risk management capabilities or application in the businesses, it’s harder for that mutual to self-police.” 

Australian Live Music Business Council director Andrew Bassingthwaighte said the “paramount” issue for the industry is to show it can be an affordable risk for insurers. 

“It all comes back to claims,” he said. “The only way we can demonstrate to the insurance industry why they should be reducing premiums ... is that [risk mitigation] work venues are doing is reducing the [number of] claims and value of claims.”

Jason Holmes, director at Queensland broker H2 Insurance, said that while the risk might not be worsening, the type of claims has an impact. Liability laws and the way the courts respond can differ from state to state, meaning that insurers can be quicker to settle cases in some jurisdictions.

“It varies state to state, because of the state legislation, and that is a big problem,” he said. 

“Where some states have a different way of handling claims or a different way the courts process...the insurers know that ... if they are going to a certain state, they know that this won’t be good and [they] are much better off trying to settle a claim rather than going against it.” 

He also pointed to crowd behaviour as a factor contributing to losses – particularly at outdoor festivals – arguing there “needs to be parameters on what people can do” at events.

“Sometimes it’s to do with the type of genre ... sometimes I cringe at watching ... [the artist] try to engage with the crowd and how they engage with the crowd.

“I would think, OK it’s fun ... but it is only fun until something goes wrong.”