Industry lobbies government on cyclone cover crisis
The Marina Industries Association (MIA), the Australian Consumers Insurance Lobby (ACIL) and marina owners in northern Australia have raised alarm over a deepening insurance crisis created by the need to insure property against cyclone damage. A forum was held by ACIL in partnership with MIA for marina owners in northern Australia on 19th July.The Cyclone Reinsurance Pool, established by the former LNP government, was scheduled to include marine insurance from 1st July 2023. However, the current Labour government decided not to follow through with this inclusion leaving coastal communities in northern Australia with soaring costs and other detrimental consequences.
A quarter of Australia’s 300 marinas are located in the northern half of the country. Queensland boasts over 65 marinas, which tend to be the largest in the nation, each averaging storage for over 300 boats and providing essential commercial tenancy for thousands of marine and tourism businesses, including marine trades, hospitality and tourism operators.
Marinas are finding it difficult and, in some cases, impossible to secure cyclone cover for their on-water infrastructure. Some have only been able to secure partial coverage, some struggled to find cover at all. Furthermore, over the past five to seven years, marinas in northern Australia report triple-digit premium increases with some over 300%. Most have cyclone excesses of half a million dollars and are burdened by impractical policy conditions and endorsements.
The consequences of these insurance challenges are profound. The sustainability of marinas has knock-on effects to marine and tourism businesses, which are the backbone of many regional coastal communities in the north.
One example is Coral Sea Marina (above). With 525 wet berths and two vibrant marina villages, Coral Sea Marina is the largest marina of its kind in central Queensland. It is home to over 50 marine tourism operators, over 80 commercial vessels and over 140 bareboat charter vessels. It provides an entry statement to the bustling tourist town of Airlie Beach and is a top class marina facility. In a July statement, the marina noted that without inclusion in the Cyclone Reinsurance Pool, marine insurance premiums will inevitably continue to rise and the economic impact on regional tourism areas such as the Whitsundays will be significant.
“The consequences of this marina insurance crisis extend far beyond the marina owners themselves,” said ACIL chair Tyrone Shandiman. “Boat operators, both private and commercial, are feeling the impact of skyrocketing insurance costs. The combination of high insurance premiums, lack of adequate cyclone cover and increased marina berthing fees has led many boat operators to consider relocating to more affordable options in southern waters. The varying costs of insurance are causing social disparity between northern and southern parts of Australia.”
MIA CEO Suzanne Davies added: “High excesses and a level of self-insurance means marina businesses are burdened with setting aside funds as unproductive security to cover potential cyclone events, diverting resources that could otherwise be reinvested into business development.”
Both the MIA and ACIL are calling for urgent action from federal government to give relief to marinas in northern Australia by immediately including them in the Cyclone Reinsurance Pool or by subsidising insurance premiums for marinas until the policy is officially reviewed in 2025.