Victoria caravan park owners are finding it increasingly difficult to find insurance companies that will cover them as the global appetite for high-risk insurance dwindles, making reinsurance harder to come by.
Key points:
- Insurance Council of Australia says global appetite for funding risk is low, making capital scarce
- The caravan park sector is one of the markets hardest hit by the tough insurance market
- Currently, brokers are able to obtain liability insurance for most parks, but not all
Franzi Weiss bought the Jamieson Caravan Park in the Macedon Ranges six years ago and says that over the past four years her insurance premium has increased fivefold.
“These costs are a lot of money to pay to continue,” Ms. Weiss said.
“It also becomes more difficult to obtain insurance from companies that withdraw from the industry.
“Those who are still there pay more attention to what they provide.”
The funding crunch means it is becoming difficult for parks to find insurers who will cover activities such as jumping pillows.
Jamieson Caravan Park once had a waterslide, but it has since been removed after failing to carry proper insurance.
“We’re just trying to provide a fun and safe vacation spot for people. Hopefully we’ll have better insurance again in the future.”
“We have reached market failure”
Insurance broker David Hosking of Grampians Insurance Brokers said it was becoming increasingly stressful for caravan park owners.
“We are now at the point where it has reached a market failure in terms of insurance,” Mr Hosking said.
“At the moment, if you’ve bought a new caravan park and gone to insure it, you’ll find there’s no one in Australia willing to do that.
“There is only one company and even then their premiums are simply unaffordable,” he said.
Currently, insurance brokers are able to obtain liability insurance for most, but not all, parks.
Mr Hosking said it was the ‘property and interruption’ insurance sections that were problematic.
“You can potentially still operate with liability coverage. This at least gives you coverage for property damage and bodily injury to one of your tenants or the public.
“But in terms of insuring your own property, your cabins, your equipment blocks and all your infrastructure, unless you have an existing policy that could potentially be renewed.
“If you are a new entrant, you have no options at this time.”
What next for caravan park owners?
A spokesperson for the Insurance Council of Australia said insurance around the world was a “tough” market, meaning capital was scarce and reinsurance was harder to come by.
“Risk appetite is low, which may impact the cost of premiums locally, particularly in sectors that represent higher insurance risk,” the spokesperson said.
“The caravan park sector is one of the sectors that has been most impacted by the difficult insurance market, which has seen some insurers pull out of the sector.”
The Insurance Council of Australia said it was working with brokers, key insurers and underwriting agencies to explore ways to address the affordability and availability of insurance.
“This process has identified that risk mitigation and reduction measures are the most effective way to put downward pressure on premiums for this sector,” they said.