Thousands of jobs at risk after main insurer for leisure sector pulls out
Fears firms will pack up or operate without insurance
The insurance crisis has escalated after one of the last firms covering the leisure sector pulled out of the market. The move puts thousands of jobs at risk.
UK operator LeisureInsure said it will not quote for new business from this week, and from the end of the month will cease all renewals.
It was one of the last few insurers covering event companies, bouncy castle operators, leisure centres, yoga classes, soccer teachers, drama classes, some play centres and a large number of leisure companies.
Operators in the leisure sector largely rely on British insurers as Irish-based insurers are reluctant to provide cover in this area, citing large losses on what is called liability insurance.
Oxford-based LeisureInsure was a management agent for insurer AxaXL in this market.
It dealt with insurance brokers and directly with policyholders.
The Alliance for Insurance Reform said thousands of businesses would not be able to get cover.
The withdrawal of the insurer will hit the likes of play centres, paintballing and adventure centres.
Some estimates put the number of jobs at risk as high as 4,500, although some cover is being provided to the sector by brokers with access to a specialist division of Allianz.
"Our hearts go out to the small businesses affected by the LeisureInsure and AxaXL decisions," said Peter Boland, of the Alliance for Insurance Reform.
"These are friends, families, neighbours with otherwise perfectly viable businesses being closed due to something entirely outside their control."
Head of the Irish Inflatable Hirers' Federation Gerry Frawley said the 220 members of the organisation were insured through LeisureInsure and now cannot get cover.
He was told by the insurer that the compensation system in this country meant that it was no longer profitable for UK insurers to operate here.
The likelihood of a crash-out Brexit was also leading many British insurers to review operations in this market.
Mr Frawley said there was now a fear many firms that rent bouncy castles and inflatables will go out of business. And there is a risk some will carry on without insurance.
He said the situation was serious with severe implications for the industry.
Keith Gill, of leading insurance broker First Ireland, said the withdrawal of LeisureInsure has left a major gap in the market.
He said around 10 British insurers pulled out of this market in the last three years.
Compensation payments have been cited as the reason for these withdrawals, he said.
"The amount, frequency, severity and uncertainty around compensation is the issue.
"There is no insurer in Ireland writing business for leisure centres or play centres or for the likes of paintballing," Mr Gill added.
A spokesperson for AxaXL, a specialist division of insurance giant Axa, confirmed that it had reviewed its business in Ireland with LeisureInsure and was pulling out.
"We have concluded that current, well-documented market dynamics mean this business does not fit our business plan going forward. As such we will not be renewing this business with LeisureInsure in Ireland as of August 1, 2019."
Mr Boland called on the Government and Taoiseach Leo Varadkar to engage directly with Irish insurers to figure out an urgent solution to the crisis.
Jane Brady, of Event Insure in Leitrim and Dublin, said her brokerage had capacity to cover community festivals and other local events.
But she said British insurers regard this market as a "basket case" due to high awards and frequent claims.