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Ongoing challenges with industry operators securing insurance has seen Nine television’s A Current Affair report on the plight of caravan parks securing appropriate cover.

In a report last night focussing on the Lakes Bushland Caravan and Lifestyle Park in Victoria’s East Gippsland region, A Current Affair went as far as suggesting that the tradition of a Australian campsite holidays may be under threat as caravan park owners battle to find insurance for destinations citing insurance companies as declining cover to caravan parks due to a scarcity of global insurance market capital.

April Whiston, who owns the Lakes Bushland Caravan and Lifestyle Park and who has public liability cover, explained "I've been knocked back from 14 different companies

"They're just saying no. They won't give any explanation. They won't come to the park.

"I know we're not the only ones, it's happening to hundreds of parks across Australia."

Whiston said asset protection insurance covers a range of incidents at the caravan park, not just natural weather events like fires and floods, telling A Current Affair "it's for accidental damage, it's if a tree fell on them, it's if a car drove through them, it's those things. We can't even get insurance for that.

"If something was to happen we would have to redraw off our mortgage."

The Insurance Council of Australia told A Current Affair in a statement “the increasing scale and frequency of claims due to extreme weather events has raised costs and rendered the insurance market unprofitable in this sector.

Grampians Insurance Brokers Director, David Hosking went on to explain "caravan parks will close,

"If we don't do something about this, not just caravan parks but the whole tourism industry is in trouble."

Hosking expressed his belief that insurance companies are blanket banning all caravan parks, rather than assessing them individually, noting “the incredibly frustrating part is, they're not differentiating between parks

"So you might have an urban park, for example, that's a completely different risk to a park in the middle of a national park.

"But there's no distinction, they just say we're not going to insure caravan parks."

In response to the difficult insurance conditions facing its members, the Camping and Outdoors Association has commenced work on creating a discretionary mutual fund (DMF).

Camping and Outdoors Association Chief Executive, Daryl Robson recently advised that the peak body, which represents campgrounds and farmstays operators, has engaged KJ Risk Group to arrange the program.

Statement by the Insurance Council of Australia (ICA):
Currently in the global insurance market capital is scarce, reinsurance is more difficult to obtain, and risk appetites are low. These factors are impacting the cost of premiums locally, particularly those sectors that represent a higher insurance risk such as caravan parks.

The increasing scale and frequency of claims due to extreme weather events has raised costs and rendered the insurance market unprofitable in this sector over a long period of time.

The addition to many caravan parks of amenities such as swimming pools and inflatable amusements like jumping pillows has also increased the risk profile of this sector, which is reflected in premium costs.

The Insurance Council has been engaging with insurers, brokers and underwriting agencies who service the caravan park sector to look at how we can together improve the affordability and availability of insurance.

This process has identified that risk mitigation and risk reduction are the most effective way to put downward pressure on premiums for this sector.

The ICA is working with the Australian Caravan Industry Association to develop guidance and assistance for park operators on practical measures they can implement to be better placed to obtain insurance going forward.

Statement by the Victorian Caravan Parks Association:
The Victorian caravan park industry is worth over $2 billion to the Victorian economy, nearly all of which benefits regional Victorians. The industry generates over 14,000 jobs or 29 jobs for every $1 million generated by caravan park businesses. The Victorian Caravan Parks Association represents 380 Victorian caravan parks.

The association is aware of the challenges the industry has had in securing property insurance, particularly since the national withdrawal, for commercial reasons, of the three major underwriters over the past two years. These companies withdrew for commercial reasons not due to industry risk exposure. Caravan parks did not suffer significant asset damage from the 2019 bushfires and no claims were made. A recent survey of the Victorian industry identified only six property insurance claims were made between 2017 and 2021 across the state with an average claim of less than $10,000 in the four years up until 2021.

The challenge is a national one and impacts many small and medium business sectors not just caravan parks. The association has been working with its national body and other state associations to lobby governments to intervene in a failed market. We have also engaged with the insurance industry and have been educating caravan park owners about the importance of continually improving risk management practices to encourage insurers back into the market.

In the absence of a market correction or Federal Government intervention, we have asked the Victorian Government's Victorian Managed Insurance Authority (VMIA) to provide cover for quality risks. The VMIA's role is "to provide insurance products where the market has collapsed and in circumstances where insurance is difficult to obtain in the private market." Despite meeting its eligibility criteria, the VMIA has denied our request. We are now seeking Victorian Government support to request that the VMIA reconsider their decision.

In very recent times we have been encouraged by some limited new capacity re-entering the market. This is likely to bring comfort to a significant number of caravan park operators who have policies maturing in the next few months. We are hopeful that this will encourage others back to the market and increased insurance choice for industry businesses.

Statement by the Caravan Industry Association of Australia:
Caravan Industry Association of Australia is aware of the challenging and complex dilemma being faced by some of Australia's Caravan Parks because of the contraction of the domestic based retail insurance market.

A contraction felt right across the entire tourism and hospitality industry.

This is primarily related to international underwriters reconsidering their market within Australia. The result of which has seen a significant withdrawal of wholesale underwriters from the market.

Caravan Industry Association of Australia continues to work closely with the Federal Government, Insurance Council of Australia, insurance brokers and industry businesses to proactively and creatively look at ways in which caravan parks can become more insurable in the eyes of offshore insurers.

Caravan Industry Association of Australia's work to date on this issue has facilitated discussions with local suppliers, working on diplomatic resolutions with government and the development of a mature risk understanding for foreign underwriters in order to bring liquidity back to the market, for example, to make it an attractive business proposition.

Caravan Industry Association of Australia remains confident to finding a sustainable, workable and practical solution for the nations caravans parks throughout 2023, with a final solution by early 2024.

Images: The Lakes Bushland Caravan and Lifestyle Park in East Gippsland.

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