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Adventure tourism operators shutting down amid insurance refusals

June 17th, 2020 | | industry

Unable to access insurance, several long-running adventure tourism businesses have shut up shop and fear their sector is in jeopardy.

Key points:

  • Adventure tourism operations are shutting down after insurers refuse to provide public liability insurance
  • Brokers and industry representatives say such coverage is becoming “financially unviable” for insurers around the world
  • The Insurance Council says “specialist brokers” overseas may be able to help, but operators are calling for government assistance

John Allport has run Tasmania’s Huon River Jet Boats for 30 years, but says he can no longer operate after his insurance policy came up for renewal.

Despite contacting 20 underwriters, Mr Allport said his broker had failed to find one willing to provide public liability insurance.

“This could kill adventure tourism,” he said. “It’s as simple as that.”

Kalbarri Quadbike Safaris has operated for 11 years in Western Australia’s Midwest, but has now closed after its broker was unable to secure insurance.

Owner Martin Rodger predicted more tourism operators would be forced to close their doors as they came to renew their policies.

“We can’t operate this business, we can’t sell this business,” he said. “We can’t do anything with this business.”

Two quad bikes and their riders parked on a tranquil stretch of river.
Kalbarri Quadbike Safari operators Martin Rodger and Ellen Nightingale have shut the business down.(ABC Midwest And Wheatbelt: Samille Mitchell)

Fellow Kalbarri quad bike tour operator Jenny McClintock, from Wagoe Beach Quad Bike Tours, is also facing closure when her policy comes up for renewal in August.

“If we can’t get public liability, adventure tourism will die within months,” Mrs McClintock said.

It’s the same story for Peter Kalbfell, who owns a jet boating company in the south-west holiday town of Dunsborough.

“If we can’t source public liability insurance we can not operate in the marine park and we’ll have to shut down,” Mr Kalbfell said. “It feels terrible.

“The State Government is trying to promote [tourism campaign] ‘Adventure Awaits’ — well, there won’t be any adventure left if the State or Federal Governments don’t step in and assist.”

Two whales along side a jet boat in greeny-blue waters.
Jet Adventures in Dunsborough is turning away customers because it can’t operate without public liability insurance.(Supplied: Jet Adventures)

Providers ‘toughening up’

“It’s been a heavy couple of years for Lloyd’s of London,” he said.

“They’ve been really rescaling their books, especially in in regards to liability risks. “They’re not charities, they are there to make a profit and statistically this is how they do it.

“They can wear losses for a couple of years but after a while they have to toughen up and that’s what we’re seeing.”

William Legge, the general manager of peak body Underwriting Agencies Council, said in many instances it was no longer financially viable to provide public liability cover.

Campbell Fuller, the Insurance Council of Australia‘s head of communication, said there was a global tightening of the market for such insurance types, although he said cover might be available from “specialist brokers” overseas.

Two quad bikes driving along a vast stretch of empty beach.
After 13 years of operation, Kalbarri Wagoe Beach Quad Bike Tours might be forced to close when its insurance comes up for renewal.(ABC Midwest And Wheatbelt: Samille Mitchell)

Calls for help

The tour operators and WA Nationals Tourism Spokesman Vince Catania MLA warned that the closure of adventure tourism operations would have a big impact on tourism and tourist towns.

“If you can’t get insurance you can’t operate,” Mr Catania said.

“If you can’t operate there is no tourism product that we can sell to those visitors who want to come up and jump on a quad bike, who want to get on a boat, who want to be able to do adventure tours, whether it’s on the coast or whether it’s inland.”

Operators are now calling on state and Federal governments to step in and underwrite their businesses in a similar manner to New Zealand, which has a universal system of no-fault risk underwritten by the Government.

Under the system employers, businesses and sports clubs pay levies to the Accident Compensation Corporation, calculated to reflect the risk of an activity.

“We need some help and it’s pretty urgent,” Mrs McClintock said. “Because the longer we go on, more businesses will close down and they won’t come back.”

‘Worldwide phenomenon’

WA Tourism Minister Paul Papalia has asked the small business commissioner to provide advice about how the Government might be able to help.

“I would like to try and see what we can do to ensure people can get insurance,” he said. “But it’s not normally a Government activity.”

A close up photo of a man wearing a suit.
Tourism Minister Paul Papalia.(ABC News: Eliza Laschon)

Federal Assistant Treasurer Michael Sukkar said treasury was “monitoring the current insurance market situation”.

“While coverage is still readily available in Australia, public liability insurance market is tightening as fewer insurers are underwriting this product and have placed a greater focus on owners’ risk management and maintenance,” he said.

“Treasury advice indicates insurance markets are becoming being more selective in the risks they will underwrite, and are imposing stricter terms and conditions on policyholders.

“This is a worldwide phenomenon and is a reflection of the insurer and underwriter response to the poor financial performance of this type of insurance in recent years.”

Source: ABC

Sourced by Mike Barrow





One Response

  1. Terry says:

    We had to close our Segway tour business some years ago for exactly this reason. Over 12 years of trading, we had 4 claims for things like broken wrists, where the client sued us for $100,000. This seems to be a sweet spot where the insurer just settles, because it would cost more to defend the claim.

    Despite having indemnity forms and us being very confident in our systems etc. we were mortified to find that the insurer simply wouldn’t back us and would finalise the claim through settlement, without even informing us until it was done.

    After 4 events over 12 years, we were told they would not longer insure us as we were too great a risk. The only insurance on offer was at a premium level that was around 50% of our total turnover. Doors closed.

    Australia needs to consider a model similar to (or identical to) New Zealand’s.