It’s getting harder to be prepared
Soaring property premiums and a shortage of cover for abuse claims threatens the viability of youth programs such as the Scouts
By Miranda Maxwell
Scouts ACT has revealed its public liability and property premiums have “skyrocketed” and come with deductibles so high they make the policies “effectively unusable”.
Insurance costs are now “unsustainable”, having risen to account for one-quarter of the territory youth movement’s operational budget this year – almost $350,000.
Overly expensive or inadequate coverage terms threaten the future of outdoor experiences, the Scouts told a recent inquiry into insurance costs in the Australian Capital Territory.
“We have come dangerously close to losing critical coverage. The current insurance landscape is unsustainable for community organisations.”
Its submission gave particular focus to two areas: higher premiums stemming from worsening natural catastrophe risks, and challenges with molestation cover.
More frequent bushfires, floods and storms have inflated Scouts ACT’s premiums and deductibles, “putting significant pressure on operations”.
“Despite our proactive risk management strategies, including fire prevention measures and facility maintenance, the rising insurance costs reflect the broader climate risks.” GJ Insurance Consulting’s Greg Thomas has managed insurance for Christian venues, associations and school camps for decades.
He agrees regional pricing on property rights is now “the big hot potato for camps and a lot of clients”.
“Anything exposed to any catastrophe risk is just getting absolutely clobbered,” he says.
The Scouts are probably “hurting as much or more on property” compared with other risks due to potential vandalism, poor maintenance of remote halls, asbestos and venues on land “given to them by the local council that wasn’t really good for anything else because it’s prone to flooding”.
“They really, really have a lot stacked against them. I think half of what the Scouts ACT are probably crying about is actually probably the property rather than the liability.
“They are almost lucky to get property in the current market, which is the reverse of where it used to be.”
When Mr Thomas first placed cover for camps in 2002, insurers insisted property be included if they were to insure the “bad risk”, the liability exposure, he says. Today, it is property risks that are harder to place at affordable rates.
“Twenty years ago they would very much heavily lean on every client to take whole account or not at all, whereas that seems to have gone really full circle nowadays. Now, all of a sudden, it’s property that nobody wants, rather than the liability.”
Mr Thomas says embracing risk management as an integral part of organisational culture is a “big piece of the liability puzzle”.
His clients undertake an association accreditation program and detail their risk management plans when making submissions for cover.
“We’ve had to suggest that it could be improved and those sorts of things, but the liability has been really stable for us now for 10 years and it comes down to the years and years and years I’ve spent risk managing the living daylights out of it and making sure people actually did [the risk management] they said they were going to do. That’s been the crux of it,” he says.
Overall, GJ Insurance Consulting’s community group scheme is seeing premium increases of 5% a year in line with inflation, with no “leaps and bounds of hundreds of per cents”.
A quiet retreat with simple games will pay “a whole lot less” than one with horse riding and flying foxes, Mr Thomas says. Small operators pay $5000-$6000 a year for insurance, while the largest of his clients – with six sites in Victoria and Tasmania and 190,500 campers a year – pays $204,000 for $50 million cover and $5 million abuse cover, through a Lloyd’s syndicate.
Across 90 camps in Australia, only two or three claims a year are lodged on average – usually for trips/falls under public liability cover – he says. “None of them have been catastrophic: they’ve been the broken arm, those sorts of things.”
Sports clubs enjoy a competitive market with four or five underwriters to choose from, he says.
For example, tennis clubs can usually secure cover “easy peasy, $1000 a year or something like that … but no abuse cover.
“All the everyday sports – tennis and cricket and footy and all of those – are fine. None of them are having the problems that are being mentioned by Scouts, which have got a few problems in particular that might make them a bit more of a sore point than pretty much everybody else.
“They’re the leading edge of the problem, as opposed to the core group that are mostly all fine, even horse-riding clubs and things like that. But [those groups] don’t include abuse cover, of course.”
Cover for insureds deemed highly exposed to molestation claims has been scarce following a surge in historical abuse cases and the removal of limitation periods in 2017, which put insurers on risk indefinitely for some policies.
Almost all insurers withdrew from foster and other out-of-home care after the royal commission on child sexual abuse, and faith-based insurer Ansvar exited too in 2022, saying it was “uninsurable” and “we can’t see a way of mitigating the risk”. Catholic Church Insurance entered “run off” a year later.
UK-based Beazley offers Safeguard, but Scouts ACT says gaps in historical molestation cover have left it with significant financial exposure.
It says insurers are reluctant to offer cover due to the low burden of proof required by national redress claims. “This results in a significant financial burden on the organisation despite paying premiums.”
Mr Thomas agrees the well-intentioned royal commission has “blown the living daylights out of abuse cover” and made it “really problematic” for community organisations.
“National redress didn’t turn out quite as we all anticipated. We’d all expected some level of to and fro, a major investigation of the incident, and that the organisation would have all the facts before they were asked to make a payment. But that hasn’t been how it turned out.
“So it’s almost at market failure. There are very few options and … they’re at ridiculous prices … They won’t get out of bed for under $10,000 and then they only want to offer $1 million in cover, and the claims could be bigger.”
The Victorian government recommends a minimum of $5 million of abuse cover, but Mr Thomas says that would cost $50,000.
“It becomes impossible for small organisations to buy that sort of price and structure. So it’s really problematic.”
Large excesses imposed by insurers are a way of “basically saying, ‘You’ve got to self-insure for a fairly large chunk because we want you to have a lot of skin in the game and start taking your risk management more seriously”.
For the Scouts, Mr Thomas says the combination of volunteers, relatively risky outdoor activities and “abuse thrown in the mix as well” is leading to poor insurance terms.
“It’s a bit of a combination of the abuse cover – needing that and the issues around that – and then … a lot of volunteer leaders doing all sorts of relatively high-risk sporting kind of activities, and the risk management isn’t going hand in hand with the volunteer leaders.
“Particularly where it’s overnight and it’s one person with several kids, that’s where it becomes really problematic. It’s a lack of supervision that is the biggest problem.
“Schools are still running school camps and we’re not seeing abuse problems because there are adults supervising adults.”
Scouts ACT did secure a 21% reduction on its latest public liability insurance premium by using offshore capacity and dedicating “significant time and effort to educating the insurer about our unique circumstances”. The cost is still up 112% on what it paid in 2022-23.
The organisation wants the ACT government to establish a territory-backed insurance scheme, provide financial support for historical survivor claims, and
facilitate collaboration with insurers.
Its submission states: “The ACT government can support community organisations like Scouts ACT in managing the financial risks resulting from historical insurer collapses.
“This would enable organisations to continue their essential services while addressing their obligations to survivors and ensuring long-term sustainability.”
