Item - 2021.EC20.10

The Economic and Community Development Committee:

1.  Referred the item to the General Manager, Economic Development and Culture and the Chief Financial Officer and Treasurer, with a request that they consider the additional information that was discussed during the March 25, 2021 meeting of the Economic and Community Development Committee, coordinate the City's response on live music venue insurance with other orders of government, live music venues, and the insurance industry, and report in the second quarter of 2021.

Even before the COVID-19 pandemic, live music venues in Toronto had been facing an increasingly challenging situation for many years. Rising land values, rents, and property taxes along with the pressures of development in the downtown core had shuttered many venues. Now, live music venues are facing a new threat - the inability to renew their commercial liability insurance.

Although insurance coverage rates had been increasing significantly over the past several years, in 2020 some venues were confronted with vast increases in quoted premium rates and deductibles compared to 2019. Other venues, with no recent claims against their policies, have been unable to secure commercial liability coverage at any cost despite their brokers having contacted many insurance carriers. This is due to several factors: first, live music venues may increasingly be viewed by insurers as "high-risk" businesses because they operate at night and serve alcohol; second, insurers are seeking to limit their own risk after being hard hit by paying out on pandemic-related claims and other global natural catastrophes; finally, at least one major global insurer has ceased to underwrite policies for businesses in the hospitality and entertainment industries, leaving a vacuum on the supply side.

Industry experts are urging governments to take action to address this pressing issue. In a recent report prepared by Nordicity for the Canadian Live Music Association, one of the top recommendations to support the industry in recovery is to establish a group insurance program tailored to live music venues. The Nordicity report suggests that such a program would represent a low-cost, high-impact way to support both the reopening of the sector as well as its long-term sustainability. Accordingly, to address this urgent need from the sector, this report proposes that the City of Toronto work with its insurance broker to create a City-backed insurance program for live music venues.

To develop this program, the City would work with its insurance broker to convene a panel of potential insurers who could provide commercial liability coverage for live music venues that meets the City's minimum insurance requirements. Venues would be marketed as a group to leverage buying power and access discounted premium rates, reducing the potential strain on venues. The City would support the program by stepping in to cover the cost of a one-time quarterly premium installment in the event a venue is unable to pay. The venue would be required to repay the cost of the missed premium payment to the City, and could only take advantage of this arrangement once over a two-year period, minimizing the potential financial risk to the City. The City's backing of this program will encourage insurers to offer more flexible and affordable policy terms than those currently available in the market, creating an important lifeline to sustain Toronto's vibrant live music venues.