Edition 02/2002
The
situation in regard to the cost and availability of liability
insurance has featured regularly in recent editions of the IEA Sport
Monthly Update. Whilst the matter has received plenty of media
exposure, it's impact on sport, recreation and society in general is
such that we again address the issue in this February Update,
featuring an article appearing in VicSport's newsletter
"Sportsview", and reproduced with their permission.
The article is from an address by Peter Jamvold, Group Manager,
Southern Division, Insurance Council of Australia, to the Outdoor
Recreation Forum held in December 2001.
Insurance:
A Community Issue
It is
unlikely that anyone in the Outdoor Recreation industry today will
argue with the proposition that public liability insurance has become
a major concern for the community.
I
wonder, however, if everyone would agree with my further proposition
that the solutions to the problem are a matter for the community to
determine.
Recent
History
Up until today our approach has
been to address groups such as this to propose means whereby
individual operators might take action on their own behalf to improve
their insurability. We have addressed numerous forums, many
facilitated by the Victorian Government. This is a good
opportunity to publicly compliment the Government for taking such a
proactive and mature stand on this significant issue.
At
these forums we have recommended, first, that operators consult
with insurers and brokers on their circumstances. Second, we
have urged operators to seriously review the risks in their business
and consider how these risks might have been reduced and better
managed. Third, we have suggested that operators consider
opportunities to join with other companies or organisations with
similar risk profiles to spread their insurable risks through pooling.
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All of
these steps are important. Any outdoor recreation operation
would be well advised to consider them and, if appropriate, take
action on their own behalf.
Next
Steps
The next proposition
I want to put to you is a serious one. It is the key to moving
ahead. It is that as important as risk management pooling by
individual operators might be, there will be no significant resolution
of the public liability problem without serious structural changes to
the market.
What
do I mean by "structural change"?
I
mean changes that will attract insurers back into the market and that
will result in affordable public liability premiums being made
available to small businesses and community groups, among others in
the community.
In practice this means taking steps to reduce public liability claims
costs to an extent where public liability cover becomes commercially
viable. The reduction in claims cost will also need to be
sufficiently large to enable insurers to reduce premium levels while
still maintaining commercial viability.
This
is a big ask. How do we propose to do it?
Options
available to us include:
Risk
transfer: Where operators of
inherently risky activities, such as caving or free fall parachuting,
can require participants to assume the inherent risk. There are
questions about the legality under the Trade Practices Act of the
disclaimers or indemnities that would be required to give effect to
such a measure. Any lawyer or insurer will point out that the
indemnity will have to be sufficiently robust to stand up in
court. These are questions we need to address.
Risk
transfer has been a key element of the strategy employed by the white
water rafting industry in British Columbia in Canada to reduce claims
costs and induce insurers back into their market.
Continued
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