In Wollongong, the Lake Illawarra Water Ski Championships were cancelled as the $50,000 public liability premium for the one day event could not be raised. Bayside City Council’s Hampton Street Festival was also cancelled. Mudgee Shire faced with a $5,000 premium cancelled last year’s Christmas Carols. Similarly, Bombala Shire no longer runs its local growers’ market. For the Southport Olympic pool, premiums have leapt from $7,800 to $66,000 in two years. In Cairns, the Marlin Coast Neighbourhood Centre was notified by its insurance agent that its public liability cover would not be renewed. The Centre has obtained cover with a new broker but the premium increased 500 per cent! So, around the nation, the list of events and services to be cancelled, and the hike in public liability premiums goes on. With Local Governments and community groups forced to cancel a variety of events, the effect on communities large and small is profound. In its submission to the recent Ministerial Meeting on Public Liability, the Australian Local Government Association clearly put the case that social capital is being eroded and community cohesion weakened as a result.
Escalating premiums see Councils faced with three options – increasing rates, introducing user pays charges or curtailing other activities to afford the premiums. Councils are also concerned for their local not for profit community and sporting organisations that are also grappling with the problem of increased premiums.
Councillor Mike Montgomery, President of the New South Wales Shires Association said that communities are being ‘ripped apart’ with insurance premiums spiralling out of control.
Increased premiums, and in extreme cases, the failure to obtain public liability cover, is forcing some local businesses to close. The multiplier effect of this on local jobs, and ultimately Council’s rate base, goes without saying. Towns and regions that rely heavily on tourism, ecotourism and outdoor activities are particularly vulnerable. Many operators will no longer be viable if they attempt to pass on increased insurance costs to their customers.
In Victoria’s Delatite Shire, the township of Mansfield with a population of 3,000 is heavily reliant on high country, adventure tourism activities. Some 28 businesses face closure on 30 June as they cannot afford the spiralling premium costs. Council has moved quickly drawing up its ‘Mansfield Proposal’. With minor injury claims the main reason insurers have increased premiums in Victoria, the Mansfield Proposal recommends that serious injury needs to be defined by statute, and that those who participate in adventure tourism activities should accept minor injury as a risk. Operators should be required to offer participants Personal Accident insurance at their own cost. These proposals are currently being looked at by the Victorian Government.
The Ministerial Meeting on Public Liability on 27 March has all the three spheres working together to find solutions. Commonwealth, State and Territory Ministers and the President of the Australian Local Government Association (ALGA) reaffirmed a shared determination to tackle the problems of rising premiums and reduced availability of public liability insurance. ALGA President, Councillor John Ross, said that the Commonwealth has agreed to look at what it can do under the Trade Practices Act, while the State and Territory Governments are dealing with tort law reforms, such as structural settlements, thresholds or caps and the high administration costs of common law claims.
For Local Government’s part, it is looking at the possibility of extending its Mutual Liability schemes to cover community groups.
Also at the March Meeting, a committee was established to prepare a report by the end of April. A further Ministerial Meeting, again involving Local Government through the ALGA, is scheduled for May. The short time span that has been set clearly recognises the urgency of the situation, as well as the necessity for all spheres of government to work together in finding solutions.
