Australia’s insurance industry has called for sweeping reform of state and territory civil liability laws amid mounting pressure on business premiums and waning insurance availability in high-risk sectors such as live entertainment, tourism and community events.
In a white paper released on Wednesday, the Insurance Council of Australia (ICA) urged governments to modernise long-standing legal frameworks that underpin public liability insurance, warning that failure to act will continue to drive up costs for small businesses and not-for-profits
The paper, A Sustainable Public Liability Insurance Market in Australia: The Case for Civil Liability Reform, found that the average cost of public liability cover has risen by up to 60 per cent since 2019, outpacing inflation and outstripping risk improvements by insureds. Some live music venues, it noted, have seen premiums climb from around $15,000 to more than $150,000 annually.
ICA chief executive Andrew Hall said insurers have been working with businesses struggling to afford coverage but that legislative change is now essential. “Insurers have been working with businesses facing affordability pressures and challenges accessing insurance, but it is clear improvements to civil liability settings are needed to ensure they remain fit for purpose,” he said, as quoted in the ICA release.
Hall added that the sectors most exposed to rising premiums — including tourism, hospitality, and recreation — were vital to local economies. “After nearly 25 years, it is the appropriate time to review civil liability laws to ensure public liability insurance is on a sustainable footing and continues to provide the security businesses rely on,” he said.
The ICA’s analysis found that the cost pressures on public liability are being fuelled by a combination of social inflation, higher legal expenses and complex personal injury litigation. Key cost drivers include the surge in psychological injury claims, growing nervous shock awards, and a rise in so-called “worker-to-worker” claims — where an injured subcontractor or labour hire employee seeks damages from a host employer or third party.
The report proposes a coordinated national review of tort and civil liability law to update definitions, tighten eligibility criteria for certain claims and cap legal fees in lower-value cases. It argues that many of the frameworks in use today were introduced following the 2002 Ipp Review and have since eroded through court interpretations and rising litigation rates.
Among its recommendations, the ICA calls for clearer thresholds for psychological injury compensation, consistency in assessing non-economic loss, and reforms to statutes governing dangerous recreational activities — which the report says have not been meaningfully updated in more than two decades.
The council also highlights the mounting effect of worker-to-worker claims, which now account for as much as 70 per cent of bodily injury claim costs in some portfolios, with average settlements exceeding $250,000. It proposes restricting recovery actions to within three years of an incident and introducing proportionate liability for third-party contributors to such claims.
Industry groups have thrown their support behind the ICA’s reform push, warning that without change, community and cultural organisations could be priced out of existence.
Australian Live Music Business Council chair Howard Adams said the reforms represented “a great opportunity for Federal and state governments to work together for the benefit of a struggling live music industry”. He told Insurance News that many members — mostly small and medium-sized businesses — were now unable to access affordable insurance despite contributing significantly to local economies and cultural life.
Night Time Industries Association chief executive Mick Gibb echoed the concern, telling Insurance News that the inaccessibility and unaffordability of public liability insurance for nightlife businesses “poses a grave risk to the ongoing viability of the venues that give artists, performers and creatives their first platform to showcase their art”.
The ICA argues that while risk management improvements remain vital, they alone cannot overcome structural flaws in state legislation. Its white paper outlines 23 specific recommendations across areas such as psychological injury thresholds, limitation periods, legal cost caps and measures to combat “claim farming” — the practice of soliciting personal injury claims through online or phone campaigns.
“Ensuring laws support a sustainable and fit-for-purpose public liability insurance market is essential to supporting businesses,” the council said.
The paper concludes that reforming outdated civil liability frameworks would reduce claims inflation and restore underwriting appetite in lines that have become increasingly uneconomic for insurers, particularly in the hospitality and community sectors.
For insurers, the message is clear: without a coordinated effort to modernise liability law, Australia risks repeating the early-2000s public liability crisis that saw community events cancelled, premiums spike and underwriting capacity vanish.
