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Anticipated Rise in Marina Insurance Premiums to Impact Northern Australia's Aquatic Tourism Costs

 


A potential increase in the cost of reef excursions looms as tour operators consider passing on the rising expenses of marine insurance premiums. Along the northern coast of Australia, marinas face mounting insurance costs attributed to natural disasters like cyclones, affecting recreational boat owners and charter businesses.

Breakwater Marina in Townsville, for instance, houses numerous boats, including businesses offering popular activities such as whale watching, sailing, and reef tours. To cope with escalating insurance expenses, the marina's management plans to raise berth rental fees, hoping this won't prompt boat owners to leave the area.

The steep climb in insurance premiums over the past seven years has forced Breakwater Marina to increase its annual insurance payment from $50,000 in 2016 to about $217,500 today. Berth rents have also steadily risen since 2015 and are anticipated to continue doing so.

The consequences of these insurance hikes reach beyond the marinas themselves, as they play a pivotal role in regional communities, generating economic benefits and social advantages.

Tour operators, like Adam and Steph Hinks, who run a tour company at Magnetic Island Marina, are grappling with the burden of rising costs. They worry that escalating prices could discourage tourists and lead them to seek more affordable experiences abroad, potentially impacting the local tourism industry.

There are 21 marinas located north of the 26th parallel line in Australia, and several of them have experienced significant increases in insurance premiums in recent years, with some reporting premium spikes of up to 150%.



The Australian Consumers Insurance Lobby (ACIL) calls for government action to address this issue by including the marine industry in the $10 billion Cyclone Reinsurance Pool, a scheme initiated to reduce insurance expenses in cyclone-prone areas.

Assistant Treasurer and Minister for Financial Services, Stephen Jones, has promised a government response to the Joint Select Committee's inquiry into the reinsurance pool. The Insurance Council of Australia (ICA) argues that there is no substantial difference in marine insurance premiums between northern and southern Australia based on portfolio averages, emphasizing that premium variations are influenced by factors like location, age, hazards, asset values, and condition.

Nevertheless, the ACIL underscores the urgent need for government intervention, as the increasing costs could have severe repercussions for marine operators in the region if left unaddressed.

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