Show won’t go on: Insurance hikes threaten show rides and amusement parks

An insurance crisis crippling Australia’s amusement and leisure industry could force the end of iconic city and country agricultural shows and tourist destinations such as Luna Park.

A massive hike in public liability insurance premiums in the past 18 months has forced hundreds of small and family-owned businesses to either cease trading or take on huge debts as they attempt to safeguard themselves against potential accidents.

Rides at shows and amusement parks could be shuttered if an insurance crisis crippling the industry isn’t resolved.Credit: Justin McManus

With insurers seeking better returns in lower-risk markets, travelling carnival rides, go-kart hire and jumping castles are struggling to renew expiring policies, with warnings that unless an alternative – such as a discretionary mutual fund – can be established it could be the death of the country show.

Operators in the sector have been struggling to obtain affordable insurance because of premium increases exceeding 200 per cent, with Melbourne’s Luna Park now forced to pay $1 million for public liability insurance of $20 million. Two years ago it cost $135,000 for $100 million.

Small Business and Family Enterprise Ombudsman Bruce Billson said there was a “clear and present danger” facing the sector because of an inability for the businesses to get insurance cover.

He warned it could force the closure of businesses that Australians “know and love”, triggering significant job losses – particularly in regional areas – stranded assets and loss of economic activity generated by metro and regional shows and amusement parks.

Public liability insurance coverage is a legal requirement for the operation of rides at showgrounds and fixed installations, both through contractual obligations and obligations imposed on councils and other landowners by state and territory governments.

“As businesses look to re-open after lockdowns, this issue is a shattering blow for those small and family businesses in the amusement, leisure and recreation sector which will be forced to stay shut because they can’t get insurance,” Mr Billson said.

“There is a very real possibility shows won’t go on – something has to be done for the show to go on.”

The sector warns school fetes also face being unable to hire jumping castles, slides, obstacle courses, rockclimbing walls and dodgem cars unless a solution is found.

The industry has warned that some operators may choose to operate without insurance, leaving consumers and landowners potentially unprotected.

Australian Small Business and Family Enterprise Ombudsman Bruce Billson.Credit: Dominic Lorrimer

Australian Amusement Leisure and Recreation Association president Shane McGrath, also the operations manager at Sydney’s Royal Easter Show, said the industry was facing “catastrophic consequences” of a failing insurance market.

“We are going to have more and more rides sitting vacant in storage sheds around the country, we are going to have more closures if we don’t get a solution,” he said.

“The industry forms part of an enormous cultural fabric of communities and also in the tourism sector. It is an issue we must solve or it will be too late for many.”

Luna Park executive director Mary Stuart said the industry had already been smashed from coronavirus lockdowns, particularly in Sydney and Melbourne, as well as a lack of international tourists since the borders were closed in March last year.

She said Luna Park had been forced to take on debt to meet its insurance costs but rising premiums would force hundreds of businesses to shut and thousands of Australians out of work unless the market failure was addressed.

“You can’t ‘click and collect’ the Scenic Railway. You can’t do takeaway dodgems. The past two years has really hit the industry hard and now this issue could kill off lots of us,” Ms Stuart said.

A spokeswoman for the Insurance Council of Australia said in the past three years the few insurers underwriting the sector had reassessed their involvement in these markets, globally and locally, and have reduced their involvement.

She said a recent report looking at potential solutions found there was no “one-size-fits-all solution to these issues” and it would require collaboration between insurers, small businesses and government.