Sportscover Australia leisure arm Active Underwriting Specialists says an ombudsman report recommending a discretionary mutual fund (DMF) for the amusement industry is on the wrong track.

Active Underwriting CEO Simon Allatson says the agency insures more than 3500 policies in the amusement and leisure sector and capacity is more available than suggested in a report from the Australian Small Business and Family Enterprise Ombudsman.

“Active Underwriting has demonstrated over many years that there are insurers able and willing to support the sector,” he said.

“However, as in any market, there are good risks and poor risks. A DMF should not be established to subsidise poor risks at the expense of operators who are operating safely and professionally.”

Mr Allatson says Sportscover and Active have partnered with various syndicates at Lloyd’s to provide capacity for policyholders over more than 30 years.

“It is just simply not correct to say there is only one insurer servicing the amusement and leisure sector,” he told insuranceNEWS.com.au.

Mr Allatson says in a hardening market, premiums previously under-priced had risen significantly and greater scrutiny of risks had increased the challenges in some cases.

“There was no reference in either the interim or final report about stronger quality control, stronger risk management approaches and training for personnel,” he told insuranceNEWS.com.au.

Insureds need to ensure staff are trained and equipment is appropriately and regularly maintained, he says, particularly following the extra attention placed on the industry following events such as the fatal accident at Dreamworld on the Gold Coast in 2016.

The ombudsman report reviewed and supported the Australian Amusement, Leisure and Recreation Association’s proposal to establish a DMF.

“Broadly, feedback received has agreed that while there is one insurance solution currently being offered to the sector (the Coversure-branded facility of the UK-based Aviva product), the sector believes that a DMF represents a more durable solution for their current difficulties in securing an affordable, durable solution to their insurance crisis,” the report says.

The report identified a number of challenges in setting up a DMF, including the need for substantial government involvement.

Active Underwriting points out that the nature of accidents and injuries in the carnival sector, in particular, don’t fit the pattern of regular, relatively small losses where the ombudsman report notes mutuals are known to operate more effectively.

“It is one thing to recommend a DMF but it is another thing entirely to make it work and we have serious reservations,” Mr Allatson said. “It was our submission that a stronger focus on quality assurance, risk management, safety protocols and training would provide greater security for the sector.”