Small Business Ombudsman continues to back AALARA’s DMF plans for the amusement and attractions industry

Releasing a new document today providing ‘additional insights’, Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Bruce Billson has advised of his continued backing for the proposal by the Australian Amusement, Leisure and Recreation Association (AALARA) to establish a discretionary mutual fund in response to issues faced by industry operators in relation to public liability insurance.

Following on from the ASBFEO’s The Show Must Go On report of December 2021 which called for Federal Government backing for the creation of an attractions industry DMF as a solution to the public liability crisis, Billson’s new report Additional Insights Supporting a Discretionary Mutual Fund for the Amusement, Leisure and Recreation Industry, highlights ongoing difficulties faced by industry operators.

It advises that the ASBFEO “is only aware of one current insurer for the industry. This insurer is based offshore and sector participants are uncertain about the durability and longevity of this arrangement, underwriting guidelines, the range of activities and asset types able to be insured and future premiums and terms.”

It also notes a survey it conducted that attracted 262 responses which found that while 90% of businesses said they currently hold public liability insurance, 75% of respondents reported finding their insurance policy renewal process either very difficult or difficult and that 78% of businesses said they have already been affected by public liability insurance changes, with a further 15% expecting to be affected within the next 12 months.

DMF would ‘reduce the likelihood of accidents’
In its conclusions, the report advises that the “industry is under significant strain from the dramatic increase in cost and the absence of public liability insurance for many” noting that ALAARA’s proposal to establish a DMF “remains the most suitable solution in response to significant public liability insurance dysfunction.”

It is also advises that “accidents have occurred in the sector in the last twelve months, and it is critical that adequate support is available to those who have been harmed or injured” suggesting that “as the primary option for risk management in the industry, a DMF would be able to impose conditions of entry standards for members and enforce strong risk-management culture and procedures, reducing the likelihood of accidents.”

It goes on to say “as the DMF’s market is strictly defined by its members, it would also be able to collect claims data and provide incentive structures for members to engage in best practice risk-management and mitigation activities.”

Stating that support from the Federal Government is vital to the creation of the DMF, it states “the initial capital investment required to establish the DMF is unable to be generated by the industry in the short-term” and that Australian Government support “for the establishment of the DMF is a vital component to the proposal.”

The ASBFEO then recommends that the Australian Government should support the proposal and “provide seed funding of up to $5 million for the fund (subject to actuarial advice confirming adequacy) to ensure adequate capital reserves in the start-up phase while the premium pool is being developed”.  

It also calls on the Australian Government to “commence engagement with state and territory governments to pursue the necessary legislative and regulatory reform needed to recognise and support the effective operation of an industry led DMF.”

AALARA response
As of this morning, AALARA released a communication to stakeholders and members that advised “we would like to thank all those AALARA members who took the time to complete the most recent survey, to provide the ASBFEO team enough data to deliver this second report and further cement our plight to the Federal Government the need to establish a Discretionary Mutual Fund for the industry.

“With the release of these findings, AALARA will now be looking to have extensive talks with a number of Federal Ministers to move the DMF proposal forward, following the change of Government.”

Click here to view the ASBFEO’s new report Additional Insights Supporting a Discretionary Mutual Fund for the Amusement, Leisure and Recreation Industry, 

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