Southern Ocean Lodge owners warn insurance hike could scuttle their plan to rebuild after bushfire
The owners of Southern Ocean Lodge have warned that a major hike in insurance premiums could make their plans to rebuild the global tourism icon unviable.
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Big insurance premium hikes could make it too expensive to rebuild Kangaroo Island’s tourism jewel Southern Ocean Lodge, its owners have warned.
James Baillie, of Baillie Lodges, which owns the hotel rated the best in the Asia Pacific last year, said that while he felt “a duty” to rebuild, he could not do so if insurance was unaffordable.
Mr Baillie suggested the State Government might need to assist, saying the issue of insurance was “the elephant in the room” when it came to rebuilding infrastructure destroyed by the fires across southern Australia.
“For something like Southern Ocean Lodge to rise from the ashes, how is that going to work? Is the South Australian government going to back these iconic assets coming back? Is that part of the recovery plan?” he said.
“It would be an incredible loss and shame if places like Southern Ocean Lodge and other tourism infrastructure on the island wasn’t returned, because KI is one of SA’s stars in terms of tourism attractions.”
Mr Baillie said the lodge, destroyed by fire on January 3, was fully insured for $60 million. While he has announced plans to rebuild, he has not had been told yet of the cost or availability of future insurance for the lodge, which is surrounded by mallee bush.
“It’s our intention to move ahead and very, very quickly and start planning rebuilding recreating and deliver Southern Ocean Lodge as an icon for SA. That said, if we can’t place insurance … what if we are uninsurable?” he said.
“If we can’t get insurance we can’t build the lodge. Why would you go and spend $30-$40m rebuilding something like Southern Ocean Lodge only to be able to lose it again?”
The lodge and other tourism developments nearby burned by the fires are seen as vital to the economic recovery of KI.
But the Insurance Council of Australia insisted premiums for the fires – with claims now reaching $1.4 billion – would not be a major issue.
“Insurance premiums across Australia are unlikely to be significantly impacted as a result of the current bushfire situation,” said spokesman Campbell Fuller.
“Insurers have planned for, and factored in, natural disasters occurring in Australia and are prudentially and logistically prepared.”
However, Mr Baillie pointed to premiums in disaster-affected areas in Queensland, hit by cyclones and floods, which have in some cases tripled, forcing some companies to self-insure.
His company, which also runs luxury resorts at Lord Howe Island, Uluru and the Daintree, last year pulled out of plans to buy a Queensland island because the annual insurance policy would have been over $2 million.
Mr Baillie’s KI lodge was on a cliff overlooking the Southern Ocean, next to the Flinders Chase National Park, on a property almost entirely covered in vegetation.
He said bushfire management and vegetation practices needed urgent review.
“The ability to do cool winter burns, have fire breaks – none of that is possible,” he said. “It’s so complex under existing legislation, and it’s something that really needs to be considered.”
Better management and burns would help reduce the risk of further fires and were vital to keeping insurance affordable, he said.
