The Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Bruce Billson, has released the final report into the insurance crisis facing Australia’s amusement, leisure, and recreation sector. The report, entitled The Show Must Go On, says that a Discretionary Mutual Fund (DMF) is the most practical and durable answer in helping the amusement, leisure and recreation sector to keep going in an environment of rising global insurance premiums.
“Right now, there is a very real possibility the show cannot go on if small businesses in the amusement and recreation sector cannot get the essential risk protection they need to operate,” Billson said. “This inability to secure insurance coverage puts thousands of jobs at risk and means many of the attractions people know and love are on the brink of being a thing of the past.
“The clear and present danger is real. To put it into perspective, the sector employs over 7000 people and contributes $1.84 billion to the economy in total,” Billson added. “If these businesses cannot secure risk protection, they face imminent closure and that will lead to significant job losses – particularly in regional areas – and a loss of economic activity generated by metro and regional shows and amusement parks.”
In light of this situation, the Ombudsman’s report endorses the Australian Amusement, Leisure and Recreation Association’s (AALARA) proposal to establish a DMF as “the only current workable solution to the immediate need for coverage in the sector”.
The final report backs up the interim report’s finding that the inability of small businesses in the sector to obtain affordable insurance is the result of a range of factors that are exacerbated by the hardening global insurance market.
“With only one insurer willing to provide coverage to these businesses, insurance premiums have risen – often by more than 200 per cent – and many businesses have been refused coverage outright,” Billson said. “Others have stranded assets, with just some of their equipment securing insurance coverage.”
Public liability insurance coverage is legally required across many activities in the sector such as fairground rides at showgrounds, kids’ play centres, laser tag and even walking tours in national parks.
DMFs benefit smaller businesses by providing cover on a discretionary basis to a group of individuals or organisations that have a similar risk profile. As long as certain criteria are met, small businesses can obtain a certificate of protection, allowing them to continue to operate.
The ASBFEO warned that the establishment of such a solution relies on support by all levels of government.
“A DMF requires legislative reform by all states and territories to ensure it is accepted in lieu of insurance for licensing requirements,” Billson said. “Additionally, the DMF needs to be recognised as a suitable solution at a local level and supported by councils and showground managers.”
He also acknowledged that a “DMF is not a magic fix”, pointing out that ongoing sector-wide commitment to best practice risk mitigation measures are required and that members of the DMF act in the best interests of other members.
“On balance, as the insurance crisis threatens the livelihoods of thousands of hard-working Australian small-business owners along with many of the family entertainment activities that we hold dear, a DMF is the only suitable pathway forward,” Billson averred.
The Show Must Go On final report and overview can be found here.