The looming insurance crisis is threatening the closure of operators in the amusement and adventure tourism sector. Some high-profile locations in the industry have already closed their doors, and many more may follow suit if the status quo remains.
A public liability insurance cover is mandatory as part of the licensing conditions for amusement and leisure operators.
Excluded and Priced Out
Many insurance providers have pulled out from writing and renewing public liability insurance policies for rides and attractions over what the perceived “financial unviability” of this sector. These companies have freely excluded business in the leisure industry terming them “high-risk”
So many have been priced out with insurers hiking their premiums. Most insurance providers have hiked their premiums by 30-40 %, and some are having clients pay up to 6 times what they were paying last year. Many businesses are still trying to recover from the financial impact of Covid-19, and are struggling to afford cover.
Seeking Government Backing
Plans are underway to finalize a Discretionary Mutual Fund for the industry. The proposed fund will serve as a long-term solution to cushion members through even the toughest insurance climate.
Australian Amusement Leisure and Recreation Association (AALARA,) a non-profit representing players in the leisure and recreation sector is at the forefront drumming support for the mutual fund.
Acknowledging their limited resources, AALARA president, Shane McGrath says a grant from the government will be pivotal in getting the fund set up and running. AALARA is however, confident that the fund, once up, will be self-supporting and will be able to stand on its own after the initial hump from government funding.
This past week, McGrath got to sit down with Morrison Government’s Assistant Treasurer, Michael Sukkar, and senior adviser to the Treasurer, Josh Frydenberg. McGrath described the session as productive and that AALARA got a fair hearing.
The organization presented its argument for the proposed discretionary fund and why it is the best and only solution going forward.
Ready to Go
All systems are a go, according to McGrath, and the only thing left to do is to secure government funding. AALARA has also identified a well-renowned insurer to partner with on the scheme.
McGrath, and of course, all operators in the industry are hoping for a quick turnaround, and that the scheme will be up and running soon. There is so much urgency attached to the matter as many insurance brokers have informed their clients in the amusement and leisure industry that their policies will not be renewed when they expire later on in the year.
NSW-based HIB Brokers Pty Ltd has also been pushing for a mutual scheme to address the same issue. Michael Alexander, HIB Brokers’ MD has said that they have partnered with two Australian underwriting agencies specializing in the leisure and amusement industry. He has also been actively speaking to representatives from the Federal Government.
The government’s stand however, is that AALARA should be left to handle the matter.
Projections for the Future
if the insurance crisis is not resolved promptly and a solution found fast, many operators will be forced to close down their business. Many will have to pack up and put away their rides and amusements, losing their source of livelihood.