Public liability crisis forcing small businesses to shut down

Public liability crisis forcing small businesses to shut down | Insurance Business

Public liability crisis forcing small businesses to shut down

The Australian Small Business and Family Enterprise Ombudsman Kate Carnell has implored the Federal Government to take urgent action as many small businesses were forced to shut down after failing to take out public liability insurance.

Carnell urged the government to implement her insurance inquiry recommendations to help small businesses access essential insurance products.

“Throughout the course of our inquiry, hundreds of small businesses told my office they face closure if insurance remains unavailable to them,” Carnell said.

“Small businesses have told us they have either been denied insurance outright, or their premiums have as much as tripled in a few years, effectively pricing them out of the market.”

Barra Fun Park in Townsville, for example, closed its doors after 20 years of operation after struggling to find an insurer willing to renew its public liability insurance.

“Owner Brent Stevenson cannot find an insurer willing to renew his public liability insurance. In the two decades Barra Fun Park has been operating, there has only been one insurance claim against his business. The claim resulted in a $70,000 payout to a patron who sustained an injury (hyper-extended thumb) at the park. Brent subsequently saw his insurance premium nearly triple and paid the annual fee, only to be shut down for six months due to COVID restrictions,” Carnell said.

“This is not just one isolated incident – we know there are many small businesses, particularly those offering recreational activities such as caravan parks with splash zones and jumping pillows, that are in the same boat.

“That’s why our insurance inquiry has made recommendations addressing the lack of availability of public liability insurance, which is in large part attributable to the unlimited nature of injury claims and the potential for large damages to be awarded.”

Carnell also urges the government to implement the Productivity Commission’s recommendation to launch a no-fault National Injury Insurance Scheme (NIIS) to cover lifetime care for catastrophic injuries.

“It’s been nine years since the Productivity Commission released its Report into Disability Care and Support and yet the NIIS is still under consideration, much to the detriment of the small business sector,” Carnell said.