More Australians than ever are health and fitness conscious. Reports show that the fitness business, fuelled by this cultural change, has experienced strong growth over the last decade. One industry report says half of young Australians “regularly” visit a gym or health centre. After struggling through COVID-19 pandemic closures and a tough economy, the growth prospects for gyms and fitness centres are more positive.
In this softening insurance market, are these businesses another broker opportunity?
In an interview with Insurance Business, Peter Takos (pictured), CEO of Halo Underwriting, outlined the key risks brokers should look out for with potential fitness centre clients.
“In a fitness centre, the focus should be on injury risks — both member and staff — and how those are being managed,” said Takos. “That includes supervision of floor activities, equipment maintenance and signage, waiver processes and staff qualifications.”
Apart from injury risks, property exposures can vary considerably from gym to gym.
“From a property standpoint, electrical safety, water damage exposures, for example from showers or plumbing, and security systems are all worth noting,” he said.
If the fitness centre has 24-hour access, Takos said brokers should ask about surveillance and incident response procedures.
Some of the other risks facing fitness businesses can include:
Brokers should make sure that a gym’s professional liability insurance covers the advice employees are giving to members. If independent fitness instructors are working at the fitness centre they could also consider carrying personal liability insurance.
This risk could involve threats to staff from customers or even violence between clients. Brokers should check the professional liability coverage and ensure the fitness centre has its rules and policies clearly visible to staff and clients.
Fitness centres store their customers’ personal and often financial information which could make them a target of a cyberattack. Strong password policies, data encryption and regular backing up of information can reduce this risk. Cyber insurance could also be worth considering.
A formal risk management survey would aim to look at all the risks impacting fitness centres. Takos suggested this would be a wise broker move, particularly for large fitness businesses. For example, chains like Anytime Fitness or Snap Fitness have dozens of locations around the country.
“It [risk surveys] varies by broker and by client size,” said Takos. “For smaller SME clients, formal risk surveys are less common but a well-documented conversation or a structured checklist can go a long way.”
He said this process can improve the quality of broker submissions and help clients understand their exposures better.
In a recent blog, Takos’ colleague, Jeff Miller, outlined more ways that brokers can improve their submissions. Miller, Halo’s senior property underwriter, said brokers should prioritise clear, direct communication and provide comprehensive, detailed documentation.
Miller also emphasised post claim risk mitigation.
“Whether through enhanced security protocols, structural improvements, or operational adjustments, these measures demonstrate a commitment to reducing future risks, which is a positive indicator for underwriters,” he said.
Transparency about potential risk issues is also important, he said, for fostering trust and understanding between brokers and underwriters.
“By presenting these concerns upfront, brokers can avoid potential misunderstandings and facilitate a more efficient negotiation and underwriting process,” he said.
Recent surveys point to an uptick in many Australians’ health and fitness activities.
This is supported by a recent study from the Australian Bureau of Statics (ABS) that showed an increasing number of Australians are exercising, particularly younger people. However, compared to the overall population, the numbers are still low.
The study showed that one in five adults aged 18–64 years met the Department of Health’s physical activity guidelines in 2022, an increase from one in six in 2017–18.
The biggest increase in time spent exercising was among young people. The ABS study showed that the number of teenagers aged 15 to 17 who met the physical activity guidelines more than doubled between 2017 and 2022. Although still very low, this number jumped from 2% to more than 5%.
Are you an insurance broker with clients who own fitness centres or gyms? Please tell us about some of the risk concerns you’ve raised with these clients below.
