‘I can’t guarantee my staff their jobs beyond the next insurance policy’
Rocketing insurance and costs are the reason popular children's activity centre ‘LoLo Town’ closed its doors at the weekend and with it came the warning that many more similar enterprises could follow suit.
LoLo Town, based in Beechmount Homepark, Clogherboy welcomed young children and their parents for the last time on Sunday amid revelations that, on average, premiums for play centres are running anuwhere up to a staggering €15,000 to €16,500, fuelled in part by fraudulent and exaggerated insurance claims.
The surge in claims caused by excessive out of court settlements is putting a huge strain on small businesses, many of whom will not be able to survive the steep rise in costs.
The LoLo Town news was revealed in a Facebook post that read.
“With heavy hearts, we have decided to close the doors of LoLo Town with effect from Sunday 3rd of February. We would like to thank all of our customers for their support over the last number of years,” said owner Claudia Forde.
“We decided to close Lolo Town due to a huge increase in insurance in addition to increases in other running costs. As a result of these increases the business would not be profitable and therefore we have decided to close. I enjoyed setting it up and learned a lot but I am looking forward to having more time for my family now.”
LoLo Town's Facebook page was subsequently inundated with hundreds of comments from disappointed parents who praised Claudia and her team for their care and service to local families over the last few years. The education-based play centre was embraced by the town and filled a gap for children's recreational activity after the closure of Jesters back in 2015. Now it's gone too!
With such a drastic increase for small businesses in a short amount of time, those providing classes and facilities for young people will be left with no other choice than to follow suit according to businesswoman Linda Murray.
Linda sits on the national board of directors of Alliance for Insurance Reform where she is the spokesperson for some 60 play centres around the country. She has warned that play centres in Ireland could all be closed within 18 months because of bogus claims. Her own business, Huckleberry's Den in Mullaghboy Industrial Estate has been refused cover renewal due to a pending claim and may now have to close in Navan, with the loss of 12 jobs.
Insurance companies in Ireland will not insure play or leisure-based centres for children here so all Irish businesses have no other choice than to avail of the only UK broker that offers this cover, Leisure Insure.
We contacted Leisure Insure on this issue but had not received a reply by the time of going to print.
“There will be no play centres in Ireland in 12 months because they will be unable to get insurance and it's that simple,” Linda said.
“Actually any business that caters for children of a certain age will be obsolete.
She is now calling on the government to fast-track solutions to the insurance crisis, including a new investigative forum.
“We need to set up the garda insurance fraud unit as a matter of urgency and reduce the huge awards for minor, fully recovered soft tissue injuries from €20,000 currently. When you take into account that the same injury is awarded just £1,000 in the UK you know that the system here is flawed. Even though innocence may be recorded on CCTV, I believe insurance companies often settle out of court to avoid hefty legal fees and so that footage is never shown in a court. In fact, 6 per cent of all claims only make it to court!
“We need another underwriter in this country that will insure these businesses to make it more competitive.”
A number of other enterprises in Meath are also facing an uncertain future including Best O Matz in Kells run by sisters Karen Yore and Amanda Lynch.
The women should be planning celebrations for their 10th anniversary in May but are instead worrying how long they can remain open.
“I can't guarantee my staff their jobs beyond the next insurance policy. Our insurance went from €3,500 in 2017 to €7,000 in 2018 and the minimum quote I have received to date is €15,500. We can't sleep at night worrying about what is going to happen. I feel like a walking heart attack.
“It should have been a momentous year being in business for ten years but I can't even bring myself to think about it or organise anything.
“We are all using the same insurer no matter what broker it's through so there's no competition out there. This one company has a monopoly.
“It's not just the activity centre's that are at risk, it's going to affect anything that involves young people. Having been here a decade we have seen the local children grow from small kids into young men and women and it's very sad that we may be forced to give up everything we have worked so hard for.”
“I run a great centre with amazing staff and customers. Like other centres, I’ve had kids that have fallen, bumped heads or come off slides awkwardly but the majority of parents know kids are kids and these things happen, especially as they see our business isn’t negligent - but it only takes one questionable claim to put everything at risk.”
The alliance welcomed a positive development recently with the Amendment of Section 8 of the Civil Liability Act 2004. The amendment reduces the period for reporting personal injury accidents to one month. This will bring an end to a loophole which has seen many businesses lack vital CCTV evidence for defending claims.
“There is progress being made, unfortunately, it's probably not going to be quick enough to save my business but it will help us going forward.
“I would like to plead with people: “ Do not claim off a business unless they have been truly negligent. Let kids be kids and have fun and let's not wrap them up in cotton wool.
I would ask any parent whose child is hurt through play in any centre or playground to think about the effect that claiming on a business has.
“You may think a company has insurance but every claim sends premiums rocketing, small businesses plummeting and prices skyrocketing,” she concluded.