A trip out to the reef could soon become more expensive as tourist operators weigh up whether to pass on the cost of escalating marine insurance premiums.
Key points:
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Marinas in Northern Australia are being hit with insurance hikes due to natural disaster risk
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Tour operators berthing at a higher cost say aqua tourists will soon be paying more as a result
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The marina industry is not included in a $10 billion Cyclone Reinsurance Pool
Marinas lining Australia’s north are considered at risk of natural disasters such as cyclones and are being hit with insurance hikes to house recreational boats and charter businesses.
In the north Queensland coastal city of Townsville, Breakwater Marina holds about 350 boats worth tens of millions of dollars, including businesses catering for popular whale watching, sailing and reef experiences.
Marina general manager Scott Marshall said he had no choice but to raise berth rents to cover insurance costs and hoped it would not lead to an exodus of boat owners.
“If we stay on this trajectory, we will be at a really critical point for people that own boats here, people that own businesses and people who rely on marinas,” Mr Marshall said.
“Whether you’re a mum and dad boat owner or you’re a commercial charter operator, you’ve got overheads, and if those overheads become excessive, you’re going to seek waters elsewhere or close.”
Breakwater Marina paid $50,000 in insurance in 2016, but a 335 per cent rise in the past seven years means it now pays about $217,500 annually.
Berth rents have increased from $2,993 per six months in 2015 to $3,764 and are expected to keep rising.
“We’re talking about regional communities,” Mr Marshall said.
“You pull out a significant property like a marina and all of its economic gains and social benefits, you’re talking big problems — the whole local economy will suffer.”
Customers wear costs
Off the coast of Townsville, Adam and Steph Hinks own a tour company based at Magnetic Island Marina, taking visitors out to the Great Barrier Reef.
Mr Hinks said their growing insurance and operating costs would soon make those attractions more expensive for customers.
“We don’t have a choice. I really struggle with how [the insurers] justify these quantum leaps in the premiums each year,” he said.
“I know there’s been some disasters along the coast, but not much has happened over the last couple of years and yet we have these massive increases.”
Mr Hinks said he was concerned tourists would be put off by rising prices and opt to head abroad for cheaper experiences.
“I fear it might make people just go to Bali or elsewhere when we’ve got the best product in the world right here,” he said.
There are 21 marinas north of the 26th parallel line [the northernmost border of South Australia] — 17 in Queensland, three in the Northern Territory and one in Western Australia.
Four other marinas contacted by the ABC that are insured by one broker had a 140 per cent increase in premiums in the past six years.
Another marina, in Queensland’s north, reported that its annual insurance premium had risen by 150 per cent in eight years from $89,000 to $225,000.
The Australian Consumers Insurance Lobby (ACIL) said the federal government needed to urgently act on the issue by including the marine industry in its $10 billion Cyclone Reinsurance Pool.
The mandatory scheme began in July last year to bring down insurance costs for householders, strata properties and small businesses in cyclone-prone areas.
“If nothing changes, we’re going to see less and less marine operators in the region,” ACIL chairperson Tyone Shandiman said.
Premium differences
Assistant Treasurer and Minister for Financial Services, Stephen Jones, said the government would soon release its response to a Joint Select Committee’s inquiry into the reinsurance pool held earlier this year.
In its submission to the committee, the Insurance Council of Australia (ICA) said there was no particular difference in marine insurance premium levels in northern Australia relative to southern Australia, based on members’ portfolio averages.
“Individual marinas’ premium increases vary due to factors like location, age, hazards, asset values and condition,” an ICA spokesperson told the ABC.
“Any inclusion of marina coverage in the pool would require comprehensive actuarial analysis … to understand if there are any potential benefits.”
However, the ACIL said its consultations with industry groups showed escalating costs in the north would have “significant consequences” without government intervention.