Unaffordable insurance hikes hitting Australian caravan parks

Insurers are refusing to cover the $24bn caravan park sector and are hiking premiums to unaffordable levels.

Big4 Adventure Whitsunday Resort caravan park manager Tanya Cran in Airlie Beach.

Insurers are refusing to cover the $24bn caravan park sector and are hiking premiums to unaffordable levels, forcing operators out of the market, into financial distress, or to close “risky” children’s playgrounds during holidays.

London-based insurers spooked by false perceptions of an entire nation on fire, underwater, or at risk of cyclones, and an increasingly litigious society, are responsible for driving up the cost of insurance, the Caravan Industry Association of Australia says.

Chief executive Stuart Lamont said the insurance industry was exiting the market for the caravan park, amusement and experience and events sectors, leaving thousands of tourism businesses across the country vulnerable and reeling. Insurers felt caravan parks were too risky, he said, even though the industry made comparatively few claims.

“Caravan parks are located in some of the best country Australia has to offer: bushland, waterfront, coastal areas,” Mr Lamont said.

“While that’s highly attractive to consumers that (makes) insurance companies – particularly those based out of London – incredibly nervous. Some caravan parks who have received insurance on a long-term basis have now fallen on the wrong side of the line, and are not being renewed as their policies come due. Alternatively, they’re pricing it at a point where there’s a substantial increase in premium.”

Mr Lamont said parks were being forced to close attractions perceived as “risky”, such as playgrounds, flying foxes, pedal cars, water slides, and jumping pillows.

“One of the other big problems we’re exposed to is a litigious society,” he said. “When I was a kid, if I broke my arm, I’d get a scolding from my father and told not to do it again. Now, parents run straight to the next lawyer and ask ‘how much can I get out of this?’.”

The Weekend Australian has been told sales of caravan parks have fallen through after buyers were unable to secure insurance, while other businesses are taking the risk of going uninsured. Industry sources say local insurers QBE and Allianz have followed overseas underwriters out of the caravan park market.

In Airlie Beach, in north Queensland, Greg McKinnon’s award-winning Big4 Adventure Whitsunday Resort caravan park has had its property and public liability annual premiums increased from $105,000 to $945,000 in two years. Mr McKinnon said his old insurer – which had covered the business for more than a decade – hiked the park’s premium from $105,000 to $265,000 for 12 months, then last month refused to insure any longer.

It took three insurance brokers, and help from the Insurance Council of Australia, to find another company, which would only offer cover at $945,000 annually.

Airlie Beach caravan park owner Greg McKinnon has had his insurance premiums hiked from $105,000 to $945,000 in two years.

“It was scandalous. At that point I thought, I’m out of here, I’m selling, I can’t fix this industry,” Mr McKinnon said.

He has since decided to press on. Airlie Beach has been hit by seven cyclones since 1993, when his parents started the park. Mr McKinnon said the $30m-a-year business had claimed on just one, Cyclone Debbie in 2007, which battered Airlie with 265km/h winds for 30 hours.

In June, the Albanese government released the modelling used to design the Morrison government’s $10bn Northern Australia Cyclone Reinsurance Pool, which revealed some communities could see their premiums rise.

An Insurance Council of Australia spokeswoman acknowledged the caravan park sector had been one of the industries hardest hit by the insurance market globally, which meant capital was scarce, reinsurance was difficult to obtain and risk appetites were low. She said the ICA was working with insurers, brokers and underwriting agencies in the caravan industry sector to address affordability and unavailability.