Representatives of the caravan park industry say more work is needed to tackle insurance accessability as businesses struggle to afford soaring premiums.
As previously reported by insuranceNEWS.com.au, caravan parks and the wider tourism industry have faced increased strain on insurance availability as the effects of the current hard market continue to be felt.
Caravan Industry Association of Australia CEO Stuart Lamont told insuranceNEWS.com.au that annual premiums for caravan parks have skyrocketed across the country, with many now facing the prospect of running uninsured.
“It has not been uncommon to see prices increase five-fold, should insurance even be offered at all,” Mr Lamont said.
“A well-known award-winning caravan park in North Queensland had annual premium increases from $105,000 to $945,000 across two years, with his long-term insurer bowing out of the sector, leaving the property subject to a thin insurance market.”
He says the problem is “both affordability as well as accessibility” and stems from wary insurers unfamiliar with the industry.
“Caravan parks are a casualty of a lack of understanding of the product by predominantly international insurers who are being more selective in their portfolio composition,” Mr Lamont says.
“While this is broader than caravan parks alone with tourism operators, sporting clubs, accommodation houses, amusement parks, events and experiences also feeling the pinch, the sector as a whole has been a victim due to unfair perceived risky locations and dangerous activities.”
Oracle Group Insurance Brokers MD Matthew Denehy says it has become “impossible” for uninsured caravan park owners to obtain cover.
“The insurers are renewing their policies that they have but not taking new business,” Mr Denehy told insuranceNEWS.com.au.
He says existing policies have seen increases between 20% and 60% depending on the park’s size, with high-risk areas finding coverage increasingly difficult.
“Some insurers are simply excluding cyclone altogether. If you are in a flood zone, you can’t get flood cover, if you are in a bushfire zone you have a 40% increase and a high excess minimum of $50,000,” Mr Denehy says.
He says he fears the inflated prices are “becoming the new norm” and will force mum and dad businesses out of the industry.
“There are major park groups that can use their size to get cover as they have the size, cashflow and ability to do that, the average mum and dad who runs these smaller parks simply can’t,” Mr Denehy says.
The Insurance Council of Australia (ICA) says the caravan park industry has been one of the hardest hit sectors by the current market.
“The increasing scale and frequency of claims due to cyclones and flood has raised costs and rendered the insurance market unprofitable over a long period of time,” an ICA spokesperson told insuranceNEWS.com.au.
“The addition, over time, of amenities that carry higher insurance risks such as pools and inflatable amusements has also raised the risk profile of this sector.”
Mr Lamont says many businesses have set up “good disaster management” to minimise losses from natural disasters as he looks to “change perceptions positively” towards caravan parks.
He says the industry has been communicating with brokers, insurers, and the ICA to provide increased confidence for insurers to offer affordable policies but warns that some solutions may not be quick enough.
“As an association we are building up existing accreditation frameworks to give specific advice around traditional infrastructure profiles as well as giving insurers real time visibility of ongoing monitoring and reporting,” Mr Lamont says.
“A working model between industry and insurers is proposed so insurers have a better understanding of how individual sites can be better assessed rather than being blanket excluded by virtue of their category.
“But the clock is ticking, and a broad-based solution may not come in time for some operators who will have to make the decision to self-insure, close their doors, or remove important pieces of infrastructure which are attractive to guests.”