Hih Insurance Crisis Cancels Christmas
Sun Herald
Sunday December 9, 2001
A COUNTRY town has been forced to cancel its Christmas celebrations after insurers demanded $5,000 to cover the festivities.
The organisers of Mudgee's street party and carol service said they could not afford the insurance bill and had to call the events off.
The festive blow is just the latest in a growing insurance crisis sweeping Australia. Community events, social clubs, sporting groups, charity groups and volunteer associations, as well as small businesses, are being hit with soaring insurance charges. Many are having to abandon events as insurance firms refuse to provide public liability insurance.
Rates have soared up to 600 per cent in the wake of the collapse of HIH and the September 11 attacks.
Recent multimillion-dollar payouts and the rise in lawyers operating on a no-win no-fee basis have meant insurers are becoming increasingly reluctant to provide public liability coverage.
Mudgee's mayor Denis Yeo said the demand for $5,000 to cover the town's Christmas festival had caused a lot of resentment.
``We are just the first as our insurance was up for renewal," he said. ``This is happening right across the country.
``We fear we will have to cancel every parade and community event next year because of this insurance cost. It is tearing at the very fabric of our community."
Other events and groups have also been hit by the insurance crisis:Goulburn Community Mental Health Association was forced to close its halfway homes, put out five clients and sack a nurse after it could not find insurance. Parkes had to abandon its annual billycart race and Forbes had to cancel its wheelbarrow derby.Two Newcastle fairs were cancelled after insurance demands of $20,000.A folk art society had to cancel its annual exhibition after was told it needed $10 million in insurance.
Faye Williams, executive officer of the Local Community Services Association, said the insurance costs were forcing many community groups to abandon fetes and functions.
``It is frightening many community groups, especially senior citizens, who hear they suddenly have to pay hundreds of dollars for insurance just to hold their tea and biscuit social meetings," she said.
``Many groups are just dropping community events they used to organise because of the cost and the concern that talk of being sued is causing."
More than 300 adventure tour operators in NSW and Victoria have also been forced to close shop after insurance coverage soared to as much as $17,000. ``Insurers have almost completely pulled out of covering tour operators," Chris Denison, president of the Outdoor Tour Operators Association, said.
Insurers say they have no choice as they are losing money. Australian insurers received $883million in premiums for public and product liability last year but paid out $1.18billion.
The collapse of the main liability insurer HIH and the estimated $77billion insurance cost of the terrorist attacks in the US has led to insurers either pulling out of the liability field altogether or pushing prices so high, some up by 600pc, that few will take out policies.
Insurance Council of Australia executive director Alan Mason said the cost of claims had escalated by 82pc in the past few years.
``A cultural thing has developed in Australia where people don't want to accept accountability; they always seek to blame someone else.
``They want financial recompense for everything that might happen to them. The cost of claims has blown out. Local authorities are also requiring people to get insurance where they didn't before."
Mr Mason said there had to be a thorough re-examination of what people could sue for and what sort of damages should be paid out.
Public liability premiums rose 14pc between 1998 and 2000 while the cost of claims increased by 52.5pc. A report by Insurance Statistics Australia found the industry was losing $150,000 a day on public liability.
The Federal Government asked the Australian Consumer and Com-petition Commission six months ago to investigate the sudden rise in insurance costs, but the commission has yet to finalise its report.
Lawyers said they were not to blame despite many going for the no-win no-fee cases. ``There is no evidence that litigation has increased," Plaintiff Lawyers Association executive director Jane Staley said.
CASE ONE: THE CHRISTMAS CELEBRATIONS
MACKINLEY Taylor was almost in tears because she could not do the Toto dance she had been practising for four months before Mudgee's Christmas Carnival.
``I worked so hard to get it right," Mackinley, 6, said as she showed off her steps, dressed in her special costume. ``The whole town was going to be there to see me. Now I can't do it."
Her sister Kendal, 12, dressed in her gold dance outfit, said Christmas had been ruined. ``I was so looking forward to it. We had been rehearsing for months."
More than 50 dancers were going to dance down the town's main street on December 19, along with several school bands and volunteer groups.
Alyssa Yeo, 12, daughter of Mudgee mayor Denis Yeo, was all dressed up in her blue tutu with nowhere to go.
``I am angry it's been called off," she said.
Danika Smith, 16, was going to do a special dance solo in the main street. ``It's obvious there is no Christmas spirit in the insurance business," she said bitterly.
Mudgee's Santa, aka Sam Murray, said it was a Christmas tragedy. ``Scrooge is alive and works in the insurance industry," he said.
CASE TWO: WATER SKI CHAMPION
AUSTRALIA'S world champion water ski racer Stephen Robertson, of Five Dock in Sydney, says he hasn't been able to race in Australia since June because there is no insurance.
``The whole racing season is cancelled because the insurance companies want $2 million to cover the events," he said.
``I have to go to Europe or the US to compete now. People over there can't believe a water sport country like Australia can't hold water ski races."
Mr Robertson, 27, became the back-to-back world champion in Las Vegas, but cannot show off his skills in races in Australia.
The 112km Bridge to Bridge water skiing event on the Hawkesbury River was cancelled for the first time in 40 years last weekend when the organisers found out that insurance would cost $2 million.
Organisers have conducted a worldwide search to find an insurer who will cover next year's racing for a more reasonable price.
CASE THREE: THE GYMNASTS
NATIONAL sports aerobics coach Carolyn Diakoumis does not know how she will meet the big jump in insurance she has to pay for her small sports aerobics school.
``The families who pay for kids to come to this club are already stretched to the limit. In the past I paid the liability insurance out of my own pocket but now it has gone up to $900 on January 1 and if I pass the cost on to the kids, some might have to pull out," Ms Diakoumis said as she trained her students at the State Sports Centre at Homebush last week.
``It could spell the end of our club. We have sent kids to the Australian championships and if this is happening to all the clubs, it could be the end of the sport.
``We have never had an insurance claim and as we are always in a gym it would be the owners who are sued if there is an accident due to faulty equipment."
More than 200 gymnastics clubs with 20,000 kids around the State are being hit by the public liability insurance fee which has gone from $110 in 2000 to $900 in 2002.
Many smaller clubs say they simply can't afford it.
CASE FOUR: KIDS' CAMPS
SUMMER and winter camps for children with epilepsy have had to be called off as insurers have pulled out of covering them for activities such as swimming, canoeing and snow skiing.
Epilepsy Association financial controller Peter Carter said QBE Insurance had insured them for public liability but only if camps were ``non-participatory, meaning they could not have physical activities.
``These camps are vital for kids with epilepsy as it is the only chance they get to do things like swimming, skiing and canoeing as there are experts on hand if they have a seizure," Mr Carter said.
``For the first time they learn they are not unique, that other kids cope with epilepsy and they can lead a proper active life."
Judy Dever of Maitland said her son Rhys, 16, went on the skiing camp last year and it transformed him.
``Rhys came back a changed boy," she said.
``He lacked confidence and had never done anything like that as he was worried about his epilepsy.
``But he made such great friends and it boosted his confidence enormously."
Rhys said: ``It was heaps of fun. I don't play any sport but on the camp I learned to ski in two days. I wanted to go back and help the younger kids, but now it's all off.
``It is bad to cancel it as it is real important for kids like me."
Editorial: Page 18
SOARING COSTS
What $10 million public liability insurance costs
Based on a shop emplying three or four part-time workers
Annual premium
1997 $384
1998 $496
1999 $667
2000 $768
2001 $922 *
Some premiums have soared by triple digits in a year. In one case the premium
jumped from $47,000 last year to at least $170,000.
* Note 2001 premium includes GST
© 2001 Sun Herald