The Queensland Tourism Industry Council is creating a panel of specialist brokers to help members secure cover, following a report in July detailing the problems of insurance affordability.

But what do local brokers think? insuranceNEWS.com.au spoke to Andrew Griffiths of Townsville-based North Queensland Insurance Brokers.

Andrew Griffiths

Are enough insurers still willing to write risks for businesses?

We are seeing more capacity emerging with a softening market, which has allowed us to increase the appetite of some insurers. So, in many cases it is easier to secure cover than it was previously. However, that improvement is not consistent across all regions. In north Queensland we are not seeing the same level of rate reduction, and island risks remain difficult to place.

For example, I would deem Magnetic Island a suburb of Townsville – we have ferries that go across every 20 minutes and cargo ferries each hour, but underwriters have said if a ferry terminal goes down, we’ve got issues with business interruption and increasing building costs to get the building up. I sometimes feel underwriters can be overcautious.

There are definitely certain occupations where covers are unavailable or extremely expensive. For some industry segments, we are still finding only one insurer willing to quote, which limits competition and keeps pricing and excesses elevated. In certain cases, overseas placement, like Lloyd’s of London, is the only option, but that typically comes with higher premiums than placing cover locally. It sometimes either makes insurance unaffordable or the risk uninsurable.

Live music and entertainment can be difficult because it’s one-off insurance rather than an ongoing event. And for parks, there’s a company called All Parks that is up our way and has capacity, but they can’t insure every single caravan and park in Townsville.

What difference does specialist knowledge make?

Specialist knowledge makes a practical difference because tourism and hospitality risks aren’t “one size fits all”. Locally based brokers who can physically view the risk and understand day-to-day operations are better placed to ask the right questions, identify exposures that are often missed and ensure the right covers and policy wordings are put in place.

Being able to walk the site and talk through how the business actually operates leads to a more accurate presentation to insurers and fewer gaps at claim time.

Are operators getting credit for investing in risk management?

In our experience, operators investing in strong risk management are not always seeing that reflected through premium reductions. In some cases, good risk management is effectively the price of admission, it’s what enables the operator to obtain insurance at all, rather than something that results in a meaningful discount.

It helps improve insurability and can support better terms, but it doesn’t always translate into lower premium in the current environment. It’s more that you’ve got your risk management to a spot where it becomes acceptable for an insurer to write it, where they may not have written it before.

How much can brokers do about the problem of underinsurance?

Underinsurance is a problem and has been for a while. People, especially up our way, are sometimes more concerned about the premium than the actual cover and will sometimes reduce the cover so they can get at least some type of insurance that covers them. But what they don’t understand a lot of the time, if they go direct or haven’t been provided advice, is that underinsurance has huge implications.

Brokers can play a significant role in reducing underinsurance. A broker should be able to identify obvious gaps where sums insured don’t reflect replacement cost, particularly for asset-heavy tourism and accommodation businesses. A broker will also have tools to produce insurance replacement estimates and should recommend formal insurance valuations where appropriate, so correct limits are declared and the risk of underinsurance at claim time is reduced.

With building costs rising, it’s critical that sums insured are reviewed regularly and not left static year after year. Sometimes an individual might believe a building is valued at X price but they’re using a real estate guide instead of an actual new for old replacement.

So, the broker is important – they can have those discussions and talk about underinsurance and rebuild costs and how it all fits together.

Can initiatives such as QTIC’s broker panel make a meaningful difference?

Yes, group purchasing models can provide an advantage, provided insurers have confidence the portfolio will be viable and profitable. If a broker panel can create consistency in risk information, promote minimum risk standards and demonstrate good portfolio performance, it can help improve insurer engagement and potentially enhance both availability and affordability over time.