Home / Daily / Caravan park premiums skyrocket after bushfires
9 October 2020
Caravan park owners are struggling to find willing insurers after last summer’s devastating bushfires and say underwriters are either declining to offer cover, or pricing policies beyond their reach.
Darren Fenech, regional manager SE Melbourne at PSC Insurance Brokers, says one insurer which PSC had been placing insurance for caravan parks through for more than 5 years, without any property claims, this year wrote that the bushfire risk is considered “too significant to offer renewal”.
“Try getting caravan park insurance at the moment - it’s nearly impossible because of the inherent risks associated with bushfires, mainly due to the environmental settings they are located in,” Mr Fenech says.
His client, a caravan park on the outskirts of Melbourne, was declined cover by the insurer, which said in a letter to PSC that “there have been several discussions about this risk prior to landing on our final position. Unfortunately, based on the reasons we initially decided to come off risk we won’t be able to extend cover beyond the expiry date this year.”
Mark Lindsay, a director at the Caravan Industry Association of Australia and operator of Southern Cross Parks, says 15 of 17 insurers approached by his broker declined cover when the policy at his Eagle View Escape accommodation near the Blue Mountains came up for renewal.
After spending $1600 on a risk management assessment at the advice of his broker, he was told the cover he paid $28,000 for previously was now priced at $116,000 at renewal.
He opted to forego bushfire and business interruption cover, instead spending $51,413 for fire and flood with The Barn Underwriting Agency and $3355 for liability with Pen Underwriting. The sum insured was $4.67 million.
Mr Lindsay, who operates several caravan parks, has another policy renewal at the end of the month.
“We’re nervously awaiting what they’ll offer, if anything,” he tells insuranceNEWS.com.au.
A Senate committee inquiry into last summer’s bushfires has recommended the Australian Competition and Consumer Commission (ACCC) monitors insurance premiums due to concerns over future price increases driven by rising natural disaster risks.
The new interim report also calls for the Australian Prudential Regulation Authority (APRA) to step up its actions regarding insurance and climate change.
“We are concerned by the effect of the increasing frequency and severity of climate change-driven natural disasters on the financial stability of the insurance industry and the apparent preparedness of the industry to make policyholders carry the burden through increased premiums,” Labor Senator and Committee Chairman Tim Ayres said.
“We have made recommendations relating to APRA supervision of the industry and monitoring of the natural perils component of the insurance premiums by the ACCC.”