The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) has released an interim report into the insurance crisis facing Australia’s amusement, leisure, and recreation sector. The report, The Show Must Go On, explores whether a Discretionary Mutual Fund (DMF) can be a viable and long-term solution to the crisis and discusses required legislative reform by states and territories to ensure it is “fit for purpose”. It also highlights the need for a DMF to be recognised and accepted as a suitable solution by councils and showground managers.
“There is a clear and present danger facing the amusement and recreation sector because an inability for these businesses to get insurance cover means that many of the attractions people know and love won’t be able to operate,” ASBFEO Bruce Billson said. “The lack of insurance coverage could lead to the closure of businesses in the amusement and leisure sector, significant job losses (particularly in regional areas), stranded assets and loss of economic activity generated by metro and regional shows and amusement parks.”
Billson also asked all stakeholders to provide urgent feedback to the ideas and questions raised in the report by 3 November.
“We are calling for submissions from those in the industry so we can further understand any issues before we release a final report to government,” Billson said. “As businesses look to re-open after lockdowns, this issue is a shattering blow for those small and family businesses in the amusement, leisure and recreation sector which will be forced to stay shut because they can’t get insurance. There is a very real possibility shows won’t go on, something has to be done for the show to go on. A DMF may represent the only workable solution.”
The interim report noted that the lack of affordable insurance was not the fault of the amusement industry, but was instead due to a “hardening” in the global insurance market, with very few insurers willing to insure the industry, and premiums – when available – rising by as much as 200 per cent.
“In many instances, the policy is priced such that it may as well not exist because small operators have no capacity to pay for the cover they need to continue operating,” the report stated. “In the case of the amusement, leisure and recreation sector, there isn’t an offering that provides full coverage.”
Public liability insurance coverage is a legal requirement for the operation of rides at showgrounds and fixed installations, both through contractual obligations and obligations imposed on councils and other landowners by state and territory governments. DMFs operate to provide cover on a discretionary basis to a group of individuals or organisations that have a similar risk profile. Under a DMF, members who meet requirements would have access to a certificate of protection, allowing them to operate the amusement rides.
