Caravan parks battle soaring insurance costs
Caravan park industry could be 'brought to its knees' due to a lack of affordable insurance coverageThe Caravan Industry Association of Australia is warning caravan parks will either be forced to close or increase pricing of overnight stays if risk-averse insurance providers continue to push up premiums or refuse coverage.
"Access to affordable and adequate insurance coverage is crucial to the ongoing viability of the (caravan industry) sector. However, in recent years, caravan park operators are increasingly expressing their difficulties in obtaining coverage, excessively high premiums, limitations on policy extensions and reduced options in the market." the CIAA said in a submission to an inquiry looking at the affordability and availability of insurance coverage for small businesses.
The CIAA said raising insurance premiums was not always justified, despite many caravan parks located in popular tourism regions at high risk of natural disasters including bushfires, cyclones and flooding.
"Although over 184 individual fires burned and many communities were damaged, along with the tragic loss of life (during the 2019/2020 Australian bushfires), not one of the 300-plus caravan parks located in these areas were damaged. Which is testament to the fire management and preparation strategies," the submission said.
Jacked-up premiums would force caravan park operators to "pass this expense onto consumers or cease operations".
There are an estimated 1600 caravan parks in Australia, creating around 20,000 jobs and generating in excess of $2billion revenue.
Water slides deemed 'high risk'
Another issue is when insurers classify upmarket holiday park attractions like jumping pillows and water slides as "high risk", in regards to public liability insurance.
"This scenario has been further exasperated by the limited number of underwriters in the market that currently include coverage for these types of activities," the CIAA said.
BIG4 Holiday Parks said many caravan parks in high risk areas "have seen huge increases in premiums, excesses and reduced cover".
"If this issue is not fixed in the next couple of years, it is likely that the industry will be brought to its knees with investment stopping and
facilities and activities being removed, resulting in less demand and likely park closures undermining the regional economies and employment of Australia," the caravan park network said in its submission.
The Victorian Caravan Parks Association cited case studies, including a Victorian caravan park located in a bushfire region that is unable to get property insurance for $18million of assets, and an insurance 'excess' that was raised from $10,000 to $500,000.
The inquiry was launched earlier this year by the Australian Small Business and Family Enterprise Ombudsman after it raised concerns "about a growing trend of insurance companies denying small businesses insurance and pricing them out of the market".
The government-backed inquiry has published 26 submissions, with a final report expected to be released by December.
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