Northern Australian marinas hit with insurance crisis

Northern Australian marinas hit with insurance crisis | Insurance Business Australia

Insurance News

Operators warn of ‘skyrocketing’ premiums

Insurance News

By
Roxanne Libatique

The Australian Consumers Insurance Lobby (ACIL) has warned that marinas in Northern Australia have taken a hit from skyrocketing insurance premiums.

At a July ACIL and Marina Industries Association (MIA) forum, a marina operator shared that they have encountered a 330% increase in property insurance premiums over seven years. Another operator claimed that their property insurance costs more than doubled in the past year.

In addition to rising insurance costs, marinas said there was a lack of adequate cover for cyclone-related damages, with some marinas being partially insured. For example, some marinas in Northern Australia have faced excesses of up to $500,000 to $1,000,000 either imposed by insurers or driven by a need to cut down on high premium costs.

“High excesses and a level of self-insurance means marina businesses are burdened with setting aside funds as unproductive security to cover potential cyclone events, diverting resources that could otherwise be reinvested into business development,” said MIA CEO Suzanne Davies.

ACIL chairperson Tyrone Shandiman said the rising insurance premiums, lack of adequate cyclone coverage, and increased marina berthing fees have forced many operators to consider relocating to more affordable options in southern waters.

“The consequences of this marina insurance crisis extend far beyond the marina owners themselves. Boat operators, both private and commercial, are feeling the impact of skyrocketing insurance costs,” Shandiman said. “The varying costs of insurance are causing social disparity between the northern and southern parts of Australia.”

Calls on government to support Northern Australian marinas

NAIL and MIA have called on the government to help marinas in Northern Australia by including marine insurance in the cyclone reinsurance pool.

“Such inclusion would provide much-needed relief to marinas in Northern Australia, mitigating the escalating insurance costs and ensuring their financial stability,” Shandiman said. “Alternatively, ACIL urges the government to consider subsidising premiums for Northern Australia marinas until the 2025 ARPC review of the Cyclone Reinsurance Pool, providing immediate relief and supporting the growth and viability of these vital community assets.”

“We specifically ask the government to include marine insurance in the cyclone reinsurance pool immediately,” MIA president Andrew Chapman said. “Alternatively, if the intention is to wait for the 2025 review as stated, the industry urges the government to subsidise insurance premiums for Northern Australia until the review is completed.

Subsidies would “offer immediate relief” to marinas, Chapman said.