Businesses in popular tourist destinations continue to struggle as insurers refuse to provide coverage following the Black Summer bushfires, forcing many businesses to close their doors permanently or risk everything by operating without insurance.
Three businesses on the New South Wales (NSW) South Coast and two in Victoria confirmed with the Sydney Morning Herald that they failed to take out insurance for their property this year for the first time.
In Victoria, a luxury bushland retreat owner claimed that 38 insurers rejected him before receiving an “insulting” quote of $6.5 million in premiums for his $3.5 million business. As a result, the Victorian retreat is now on the brink of closure even though it had never taken a hit from bushfires.
“Never in my life have I come across this,” The Victorian retreat owner said, as reported by the Sydney Morning Herald. “I didn't think it was possible.”
The business owners warned about threats that could hit regional Australia's economic recovery as natural disasters become more frequent and severe due to climate change, Australia undergoes pandemic lockdowns, and the country's border closes. They also expect the country to lose the “unique bushland experiences that prove a major international tourist drawcard.”
Last year, many business owners in the tourism sector reported to Australia's Small Business Ombudsman's office that they would have to close down if they still cannot take out insurance.
Commenting on the escalating problem, Ombudsman Bruce Billson told the Sydney Morning Herald: “We've had pubs that have been operating for a century in a vicinity of a national park being told that's not something people want to insure anymore. Some accommodation providers that offer the idyllic location as part of the appeal ... are being told it might be idyllic, but the risks are too high.”
In May, the government announced a $10 billion reinsurance pool to cover cyclone and flood damage in northern Australia and a $40 million investment in making older strata buildings more resilient to extreme weather events.
Insurers welcomed the announcement, with Insurance Council of Australia (ICA) chief executive officer Andrew Hall revealing that the industry has worked hard for many years in northern Australia to keep coverage available and premiums affordable.
“The industry has done considerable work on the key fundamentals of a public reinsurance scheme, and if properly designed and implemented, a reinsurance pool can put downward pressure on premium costs,” Hall said in a statement last month.
