Country pubs are among properties in regional areas that are struggling to obtain cover at this year’s renewals as insurers reduce their risk appetite following last summer’s bushfires, MGA Insurance Brokers MD Paul George says.

Sensitivity around fire is adding to pressures caused by a wider hardening market, increasing the risk of greater levels of underinsurance as the COVID-19 outbreak also particularly hits regional business involved in hospitality and tourism.

Mr George says brokers have been preparing insureds for market tightening and increases, but in some cases cover that was available in past years is no longer an option.

“The lack of competing markets is sadly failing these clients and these communities,” he told insuranceNEWS.com.au. “We are finding those in the regions recently impacted by fires are being abandoned.

“Country hotels are in trouble with an overall tightening of capacity. If these properties have timber floors [or] are in a regional area without a permanently manned fire station, chances are we may not be able to find a market at all, And if we can, the premium is often unaffordable.”

Margin-challenged businesses are in some cases being asked to retrofit fire sprinkler systems in order to obtain cover, in changes that are beyond their budgets.

Mr George says MGA as a regionally based broker is already seeing a more selective approach but the trend has been exacerbated by the major bushfires over summer.

“Our brokers cannot recall a time when capacity and the appetite for certain property risks has ever been so difficult, rendering some risks uninsurable,” he said.

MGA suggests finding solutions may require the involvement of insurers, local communities and governments.

“We believe there could be a combination of components which could seek to improve these risks – at least to a point where we can get back to a competitive market environment,” Mr George said.

“A problem like this can only be solved if we have all issues in front of all the stakeholders, sitting around the same table.”

Adelaide-based MGA has more than 30 offices in South Australia, Victoria, NSW the ACT and Queensland, and is also represented in WA and the NT.