Soaring premiums a challenge for operators
could force caravan parks out of business, inquiry told
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STRUGGLING caravan park operators have
warned that soaring insurance premiums could sound the death knell for the
The Caravan Industry Association of Australia claims they often face
excessively high premiums coupled with a limit on what will be covered.
"This situation poses challenges for caravan park operators who are
subject to the commercial whims of underwriters who may choose to exclude
specific coverage," the industry's peak body has told a government inquiry
into the practices of the insurance industry that impact small
businesses and whether small business insurance products are fit for
"In recent years, caravan park operators have
increasingly reported that insurance providers are imposing exponentially
higher premiums on businesses in lieu of the potential of a natural
disaster, irrespective of what risk mitigation policies that may be in
place," the CIAA said.
The association also accused insurance providers of increasingly reducing
their risk appetite for including recreational activities within their
public liability coverage by deeming activities
such as jumping pillows, water slides and BMX tracks as 'high risk'.
"This scenario has been further exasperated by the limited number of
underwriters in the market that currently include coverage for these types
of activities," it said.
The Australian Small Business and Family Enterprise Ombudsman is
investigating insurance practices and cover availability after receiving
complaints about policy denials and soaring prices.
Findings due to be
released in December
The findings are scheduled to be released in
Submissions to the inquiry have also been made by NSW's Caravan and
Camping Industry Association, the Caravan Parks Association of Queensland,
the Victorian Caravan Parks Association and BIG4 Holiday Parks.
BIG4 warned that if nothing was done to solve the problem in the next
couple of years, the industry would probably be
brought to its knees, with investment stopping and
facilities and activities being removed.
This would result in less demand and the likelihood of parks closing, thus
undermining regional economies and employment.
"We have seen huge increases in premiums, excesses and reduced cover
especially in areas with heightened increase of natural disaster risk,
whether a park is large or small," it said.
"Parks with waterparks and other activities are being further impacted
through reduced liability cover. Some are now being refused cover in
The Victorian Caravan Parks Association accepted that insurance providers
needed to carefully balance risk mitigation within their portfolios,
particularly during 2020.
But, it said, the state's caravan park operators were finding it "much
more difficult" to obtain appropriate and affordable coverage, and in some
cases could not find any all.
"This has put caravan park businesses at very significant risk of closure,
and much of the $1.2b in economic benefit to regional Victoria at risk,"
While the inquiry was timely, the association
said the Ombudsman's recommendations could not come quickly enough.
"The viability of much of the Victorian caravan park industry, the
productiveness and return from the tourism sector more broadly, and the
capacity to deliver on government regional development objectives is at
stake," it said.
The Caravan Parks Association of Queensland, which has over 415 full and
associate members, said some of them were suffering financial stress after
reporting premium increases of between 30 percent and 250 percent,
preventing them from expanding, selling or accessing finance.
"Increased insurance costs and the challenges associated with accessing
public liability insurance do not bode well for the future of our
industry," it added..
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