The Mod Club closed its doors in November. Home of The Weeknd’s first live show, the College Street concert venue gave me an embarrassing story I still tell this many years later—the time I was so adamant in arriving fashionably late to a Bedouin Soundclash show, we missed the whole thing. Very unfashionable.
The Rivoli—a smaller live music bar I frequented when I first moved to Toronto—was put up for sale last summer and remains on the market. Outside Adele and Drake both playing there, the Rivoli was the backdrop for the night one of my girlfriends met her husband. It was the perfect combination of bar, pool and live music.
Most music venues in Toronto have been closed or under restriction of some kind since last March. Over 75 have closed across Canada since the pandemic first hit, over 20 here in Toronto. With many challenges still ahead of venues like capacity restrictions, rising rent and redevelopment, reopening may be off the table for many of them.
>THE STRUGGLE IS REAL
Last fall the Canadian Live Music Association reported that 70% of its members—music venues, festivals, promoters, agents and suppliers—reported being ineligible for pandemic related government assistance programs and funding. The sector’s been advocating for financial relief and support, lobbying federal, provincial and municipal governments and launching awareness campaigns like #ForTheLoveOfLive asking the public for its support.
“The recent Federal Budget announcement was a good step in the right direction,” said Erin Benjamin, President & CEO of the Canadian Live Music Association. “Our industry has been absolutely devastated as a result of this pandemic. We’re sincerely grateful for the emergency relief, including the $70 million to the Canada Music Fund, with $50 million for live music and live music venues allocated this fiscal year.”
But the reality of pandemic restrictions means live music venues remain closed.
The economic impacts of this pandemic are vast across many industries, but the live music scene stands out—music venues in the City of Toronto generate $850 million annually and provide the equivalent of 10,500 full–time jobs. Nationally these numbers are $3 billion in GDP and 72,000 jobs. A lot of musicians and artists are out of work. Independent music venues across the country are right behind them.
>CAN’T FIND YOU COVERAGE
“Insurance has become a common financial issue for Canada’s live music industry,” said Erin. “Venues, and even festivals, are unable to find commercial liability coverage—there just aren’t coverage options for these establishments in today’s business environment. It’s crushing.”
Music venues have been losing access to insurance markets over the past few years, with fewer and fewer carriers renewing hospitality venues including bars, nightclubs and taverns—now often categorized as an excluded risk class. Many businesses were insured by markets that no longer write this line of business or have reduced their appetite for writing it in Canada. For markets willing to write the business, much of the underwriting criteria used pre-Covid continues to be used post-Covid, which is creating anomalies and making it difficult for many businesses to either access insurance, or if they’re lucky enough to find it, obtain it at a reasonable price.
“A few years ago, our insurance was $26K a year. When we closed for the pandemic, it was $77K,” said Lisa Zbitnew, Co-Owner, Operator & President of the Phoenix Concert Theatre in Toronto. “Live music venues have been rolled into high-risk hospitality like parachuting, bungee jumping and night clubs where there have been multiple shootings. Certainly, just by virtue of sheer numbers there will inevitably be some risk involved, but I think very often it’s blown out of proportion and we’re not seen for our track record and the core of what we offer.”
“It seems to be the business model of these establishments that’s the challenge with insurance carriers,” says Ben Rossington, Account Manager, Entertainment & Sport Practice at HUB International. “With revenue primarily from liquor sales, insurers view it as a high hazard risk given the volume of liquor being sold, the lack of food being sold and the increase in claims. We’ve certainly seen more liquor liability claims in Canada, especially in Ontario over the past five years with insurers covering slip and falls, patron altercations, motor vehicle accidents and general damages. We’re seeing fewer underwriters and fewer markets in entertainment and hospitality sectors as a whole.”
The general hardening of the commercial insurance market across Canada has been challenging for businesses and brokers alike. Insurers have been pulling out of high-risk products to reduce their financial risk, with some commercial rates going up by double or triple digit percentage increases because risks had been underpriced for years. Markets are now trying to correct the pricing gap while changing their risk appetites, which is having a negative impact on live music venues across the country.
“When you apply to get coverage for a music venue, the answer historically has been yes,” says Ben. “Today, more often than not it’s no. Many underwriters are no longer underwriting these businesses.”
There’s some light at the end of the tunnel. Although the insurance market continues to be extremely difficult for this line of business, some flexibility is beginning to show, and additional government relief is helping. The catch is the mismatch between historical underwriting practices and life in a new business environment—still a challenge that needs to be resolved.
When you apply to get coverage for a music venue, the answer historically has been yes. Today, more often than not it’s no. Many underwriters are no longer underwriting these businesses.
>LET’S GO VIRTUAL
Just kidding. With Ontario’s latest lockdown, music venues have been forced to close their doors, even virtually. Earlier legislation allowed concert venues, theatres and cinemas to open for rehearsal, recorded or broadcasted content as long as specific protocols were followed. The last emergency order removed the ability to livestream altogether.
“We have protocols in place and there’s nothing we can’t address with those protocols, and yet we aren’t allowed to stream from our venues,” says Lisa. “We can’t stream concerts, but there are 50 different film and television shoots taking place across the city.”
“The film and television industry have resources to dedicate to testing,” says Erin. “As a result, they’re able to put numbers in front of government demonstrating low positivity rates. We have robust safety protocols in place but no testing data. The cost of testing is prohibitive, especially for our sector who has spent the last 12 months without revenue. But if Public Health requires testing, they need to tell us and that’s what we’ll try to do. We’ve asked to consult, we’ve asked for direction on a number of occasions, with no response. It’s very frustrating. Livestreaming was our solution to moving at least some money through the ecosystem, especially getting artists paid.”
>WHAT GIVES
Over the course of the pandemic, many of Ontario’s live music venues’ liability insurance policies have come up for renewal, but insurers willing to offer coverage at an affordable price within our new reality remain scarce, putting operators at risk of having to close their businesses permanently.
“I’ve tried to be as creative as possible,” says Ben. “I’ve engaged insurance carriers and MGAs, encouraging them to create programs, work with some of the bigger markets like Lloyd’s to create a pathway for these businesses. I’ve worked with the Insurance Bureau of Canada and their Business Insurance Action Team to see if that’s an avenue for some of my clients. I’ve tried breaking things down—creating different policies for different types of activity. But the process of getting insurance through convoluted pathways isn’t straightforward—what my clients are looking for is a historical policy they’ve gotten year over year. We’re making some progress, but it’s still extremely difficult out there. I’m confident we’ll find a longer-term solution when our environment normalizes but in the interim, the challenge of finding coverage that supports today’s business reality is still quite illusive.”
Over the course of the pandemic, many of Ontario’s live music venues’ liability insurance policies have come up for renewal, but insurers willing to offer coverage at an affordable price within our new reality remain scarce, putting operators at risk of having to close their businesses permanently.
>LEGITIMIZING THE SECTOR
Erin explains how people generally perceive live music as a nice to have, which has become part of the problem. “Hopefully one of the silver linings out of this will be the legitimization of the economic, social and cultural ability we have to impact. Support from the Federal Budget certainly seems to validate this view. And let’s all take a minute to realize that more live music has been consumed in this country via livestream than in the history of ever, demonstrating how important music is to get us through challenging times. We need to make sure there’s cultural infrastructure left intact at the end of this. If we end up losing live music venues as a result of insurance or any other reason, we’ll have incapacitated the venue ladder and the artist’s ability to develop their career, not to mention weakening our direct intersection with other sectors critical to rebuild, like tourism.
“We have two equally difficult problems that have converged. We’re working our way through the Covid situation. If we come out of the pandemic uninsured, it will be insurance that keeps us from opening our doors and therefore the reason there’s no live music industry in this country. It’s unthinkable.”
>BROKERS ARE YOUR FRIENDS
“At the beginning of this, I don’t think many of us understood all the stakeholders in insurance and how they fit together,” said Erin. “Most of us, myself included, thought brokers would be able to address issues that might arise. It’s been heartbreaking to understand that they’re just as frustrated as we are. We’ve been working on this over 12 months with very little movement. Every person I’ve talked to, every company I’ve approached says wow, what a dreadful situation. But no one seems to be able to do anything about it.
“That’s why a guy like Ben Rossington is such a hero in the entertainment sector. He’s been working hard and continues to work hard on our behalf. He makes everything clear and understandable. He’s a great relationship builder. He’s someone we trust and respect and he knows our business better than anybody. He’s having endless conversations on our behalf to try to help underwriters understand the existing issues and opportunities. Insurance brokers have been great advocates.”
“I’m trying to create a program specific to music venues,” said Ben. “Currently they’re grouped together with other types of businesses—nightclubs, strip clubs—they’re all categorized under one umbrella. I’m working on getting them separated and creating a new program through standard insurance markets for music venues. But it’s a challenge. It takes a while to get things moving and get insurance carriers to a point where they’re able to offer coverage and account for today’s business realities.”
Ben emphasises that these businesses are up against the clock. “Come September we’re potentially vaccinated and touring can start. Artists will want to perform but have no place to go. Live performance can only happen in certain venues, particularly in September with the outdoor season having ended—live music will need to shift indoors. If music venues are unable to secure insurance, they can’t open their doors and there’s no place to perform. Which means there’s a vacuum of culture in the city because venues can’t get insurance. That’s a real possibility.”
That’s why a guy like Ben Rossington is such a hero in the entertainment sector. He’s having endless conversations on our behalf to try to help underwriters understand the existing issues and opportunities. Insurance brokers have been great advocates.
>PATH FORWARD
“Part of the frustration you’re seeing from our sector are the many challenges in front of us to start operating once again,” says Lisa. “We’re over a year into this situation and everybody is suffering deeply at this point.”
“Brokers’ biggest frustration is predicting carrier appetite and the challenge of creating solutions that account for today’s reality,” said Ben. “Certainly, and understandably, the music and entertainment scene feel there’s a lack of effort from our industry. Because there’s a void in communication, they don’t know what’s going on. And they don’t know what their businesses are going to do. If there were more open communication, if the live music sector was engaged, if they were part of the process, our collective understanding would increase and there wouldn’t be so much frustration.”
>ENCORE
Pre-pandemic, concert tickets were the go-to gift for me and my husband’s birthdays, Christmas or just because. I’ve often joked that if we didn’t spend so much on concerts, we could buy a house. But we made our decision long ago and concerts won that stand-off.
While this feels like a personal plea, it sheds light on some of the larger insurance and pandemic-related issues that need solutions.
Aside from vacations, birthdays and weddings, what other big moments stand out in life? Concerts.
