According to the ICA, public liability insurance premiums have surged by up to 60% since 2019. This sharp rise is attributed to complex and prolonged claims processes under the existing legal frameworks, coupled with escalating legal costs in an increasingly litigious environment. The ICA's white paper identifies three primary factors driving these cost increases:
- Psychological Injury Claims: These claims are often more intricate and time-consuming than other injury claims, leading to extended resolution periods and higher costs.
- Outdated Legislation on Dangerous Recreational Activities and Obvious Risks: Laws governing these areas have not been comprehensively reviewed since 2001, rendering them less effective in the current context.
- Increase in Worker-to-Worker Public Liability Claims: The growing number and complexity of these claims are placing additional financial strain on the public liability insurance sector.
To address these issues, the ICA recommends modernising definitions, simplifying claims processes, and harmonising laws across states and territories. Such reforms aim to enhance the efficiency and affordability of the public liability insurance system. ICA CEO Andrew Hall emphasised the necessity of these changes, stating that insurers have been collaborating with businesses facing affordability challenges, but improvements to civil liability settings are essential to ensure they remain fit for purpose.
The call for reform has garnered support from industries severely impacted by rising insurance premiums, notably the live music and nightlife sectors. Many small operators report being priced out of business due to unaffordable policies. Howard Adams, Chair of the Australian Live Music Business Council, highlighted that members are encountering substantial hurdles in accessing affordable insurance, with most being sole traders or small to medium-sized businesses already struggling to stay afloat.
Similarly, Mick Gibb, CEO of the Night Time Industries Association, underscored the broader implications of the issue, noting that the inaccessibility and unaffordability of public liability insurance for nightlife businesses pose a grave risk to the ongoing viability of venues that provide artists, performers, and creatives their first platform to showcase their art.
The ICA's white paper serves as a clarion call for state and territory governments to undertake comprehensive reviews and updates of civil liability laws. Such reforms are crucial to alleviate the financial burdens on businesses and to ensure the sustainability of industries that are integral to Australia's economy and cultural landscape.
