The Caravan Industry Association of Australia warns the sector will lose access to specialist brokers if insurance challenges in the market are not tackled.

In a submission to a federal parliamentary inquiry into small business insurance, CEO Stuart Lamont says there is “little incentive” for young brokers to specialise in a market that is struggling to secure coverage – with caravan parks a particular area of concern.

He says his industry is reliant on a small number of experienced brokers doing “increasingly unsustainable” amounts of work to obtain cover that was previously easy to access.

“Unless the underlying issues within the insurance market are addressed, there is a very real risk that the next generation of brokers will simply choose not to enter this specialist field at all.

“The loss of this expertise would further compound the challenges already facing the sector, with the industry exposed to an insurance industry [that] does not fully understand the specific risks associated with the caravanning industry relative to general insurance.”

The association says caravan parks continue to face large premium rises that do not relate to claims experience, as “some insurers and reinsurers are increasingly limiting their exposure by capping the number of caravan parks they will insure within a given geographic area”.

Mr Lamont says insurers misinterpret industry risks – such as failing to distinguish between jumping pillows and jumping castles – and do not recognise operators that implement natural hazard mitigation measures.

Cost pressures have forced some caravan parks to either underinsure their assets or increase excesses.

“This means in the event of a loss it is often not worth making a claim due to the high excess, or the business is not in a position through cash flow or insurance proceeds to adequately replace lost assets at current market value,” Mr Lamont says.

He urges governments to alleviate “excessive” charges such as emergency services levies, and backs expansion of the cyclone reinsurance pool to include floods and fires.

The submission encourages governments to work with the peak body to establish risk profiles for insurers to access.

And it adds: “The government should undertake regular visits into international underwriting markets to present best practice in the Australian environment and to better inform underwriters of the relative risk profiling within the country. The aim should be to provide confidence for these underwriters to continue to invest into the Australian market.”

Inquiry submissions can be viewed here.