Insurance Hikes And Regional Inflation

Government Backflips On Commitment For Marine Insurance Scheme

By Bronte Hodge

The Whitsunday marine industry has been left astounded, following the release of the government backed Cyclone Reinsurance Pool that completely excludes Marine Insurance, putting local small water-based businesses at an unfair disadvantage.

Once endorsed by the former Government, the current Labour Government has decided not to include Marine Insurance in the newly released Cyclone Reinsurance Pool, which was set to be a relief for the marine industry and operators.

Marine operators have seen unprecedented increases in marine insurance costs, with some cases increasing by more than 10 per cent a year, and more than $20 million in excess cover.

The Cyclone Reinsurance Pool is a scheme backed by a $10 million guarantee from the Government, which allows insurance companies to mitigate their cyclone and cyclone-related risk and therefor lower costs for insurance policies.

Previously, it was anticipated that the Insurance Pool would cover all policies, but it has now come to light that it only covers household, strata, and small business property, up to $5 million, insurance policies, negating marine completely.

Following this announcement, Coral Sea Marina has partnered with the Australian Consumer Insurance Lobby and wider maritime industry in Northern Australia to urge for federal assistance and intervention.

Joscelyn O’Keefe, Head of Marketing and Business Development for Coral Sea Marina, said the insurance crisis is impacting all marinas in Northern Australia.

“Premiums continue to rise exponentially, and the burden of extreme cyclone excesses needs to be factored into the business’s operational costs,” she said.

“It means the same for our marina, that it does for all impacted marinas; with the continued rise in insurance costs for marinas in this part of Australia, the impact for the consumer is increased berthing fees, making berthing in marinas in Northern Australia untenable for some boat owners.”

The Whitsundays region, much like many other coastal and tourism reliant areas, has seen continued spikes in marine insurance expenses which will have a flow on effect into wider regional economic spend and development.

This will also impact marine tourism operators as well, with the burden of operating their on-water tourism businesses continuing to grow as insurance premiums rise exponentially each year with overinflated excesses imposed on cyclone-related claims.

Nicole Graham has been in the marine tourism industry for 17 years, with her business, Iconic Whitsunday Adventures having three vessels in operation.

“With insurance policies, we have to pass those costs on to our customers,” Mrs Graham explains.

“And for us to keep passing those costs on to the customers, we are going to become unsustainable, and we're going to be known as ‘that's expensive to go there. Don't go there, go to Bali, it's cheaper’, where there's less regulation, there's less safety, less safety risk management plans in place and things like that.”

2017 Cyclone Debbie caused catastrophic damage to Mrs Graham’s business, with one of their vessels, Lady Enid, being out of action for seven months for repairs, and the insurance was not willing to help.

“We lost business for seven months,” she said.

“It seems unfair that big developers get this insurance relief and small marine businesses like ours do not.”

Coral Sea Marina is one of the biggest marinas in the Whitsundays and a hub for marine tourism operators.

“Marine tourism in the Whitsundays injects billions of dollars into the economy and supports thousands of jobs,” explains Ms O’Keefe.

“The marine tourism operators who take our tourists out to the Great Barrier Reef use the marina as their base.

“If berthing fees continue to rise, to offset the rising costs of insurance, marine tourism businesses are also impacted.”

Many in the tourism industry believe that their exclusion from the Cyclone Reinsurance Pool is a “kick in the guts” for marine operators.

“How can [the government] justify not including us when we employ so many people?

“And like I said, it's not just about employment, it’s about supporting all small businesses,” said Mrs Graham.

Thankfully, the maritime industry of Northern Australia has a two-pronged plan to fight against what they believe is an unfair exclusion.

Initially, they will be asking the Federal Government to reconsider the decision to omit Marine Insurance in the Cyclone Reinsurance Pool.

If by 2025 the Federal Government has not reviewed the Pool, Coral Sea Marina will lobby the Government for subsidised premiums for marina owners to be considered as an interim measure.

Mrs Graham believes this action could still be years away, but the detrimental effects are occurring immediately to the industry.

“Just knowing that the government had our back, it would show they’re supporting us,” she said.

“A lot of us are small businesses and we can’t just keep increasing our prices.”

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Nicole Graham operates a marine tourism business, and being left out of the Cyclone Reinsurance Pool is a “kick in the guts”. Photo credit: Bronte Hodge