Ombud flags insurance crisis facing amusement sector

By Melissa Coade

Thursday October 21, 2021

Bruce Billson
Bruce Billson outlines state and territory governments law reforms required to ensure the amusement & leisure sector has funding for its insurance problem. (AAP Image/Mick Tsikas)

Urgent feedback from the amusement, leisure, and recreation sector is being sought by the small business ombud, after the release of an interim report about the ‘insurance crisis’ facing SMEs in the sector.

Small business and family enterprise ombud Bruce Billson issued a statement on Wednesday saying the sector faced a ‘clear and present danger’ as a result of businesses being unable to get insurance cover, including major job losses in parts of regional Australia. The reason it had become so much harder for these types of businesses to be covered was due to a ‘hardening’ in the global insurance market, he said. 

“The lack of insurance coverage could lead to the closure of businesses in the amusement and leisure sector, [sic] stranded assets and loss of economic activity generated by metro and regional shows and amusement parks,” Billson said. 

In his interim report ‘The show must go on, the ombud outlined the law reforms required from state and territory governments to ensure that Discretionary Mutual Funds (DMF) were a viable solution for the sector’s insurance problem. It also canvassed the challenges of DMFs being recognised by councils and showground managers as a suitable answer to the insurance problem. 

“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,” Billson said. 

“Something has to be done for the show to go on. A DMF may represent the only workable solution.”

Because of the changes to the global insurance market, the ombud said that very few insurers were willing to cover the industry and that premiums (if they were available) had risen by as much as 200%. But public liability insurance coverage is a legal requirement for businesses that operate rides at showgrounds and fixed installations.

“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 ombud’s report read. 

“In the case of the amusement, leisure and recreation sector, there isn’t an offering that provides full coverage.

According to the ombud, DMFs can cover a group of individuals or organisations that have a similar risk profile on a discretionary basis. Members who met the requirements of an established DMF would have access to a certificate of protection, enabling them to operate these amusement rides.  

Among the supporters for the establishment of a DMF is the Australian Amusement, Leisure and Recreation Association (AALRA), which has submitted a proposal to the ombud calling for one to be set up to meet a ‘critical and immediate need’ for insurance of the sector. 

The ombud said that his office would be accepting stakeholder feedback on the issue until November 3.  

“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.


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