NOVEMBER 2020
     

Insurance woes could force caravan parks out of business, inquiry told

By Dennis Amor
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STRUGGLING caravan park operators have warned that soaring insurance premiums could sound the death knell for the multi-billion-dollar industry.

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 purpose.

"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.

The findings are scheduled to be released in December.

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 total."

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," it added.

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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