The Australian Small Business and Family Enterprise Ombudsman Kate Carnell has expressed concern about a small businesses being denied insurance cover and being priced out of the market, she has announced an inquiry into insurance affordability and availability.
National Insurance Brokers Association (NIBA) CEO Dallas Booth has welcomed the inquiry, he said, “This will give brokers another opportunity to show the value they provide to their clients, and the efforts they go to in seeking the best available cover at prices their clients can afford.”
“We note the inquiry is into the affordability and availability of insurance for small businesses. We know that the past six months has been an extremely difficult market in Australia, and brokers have worked very hard during the June renewal season to get the best outcomes they could for their clients.”
The Terms of Reference for the inquiry include reference to “the role of brokers in getting the right coverage”. Booth has confirmed that the association will gladly take this opportunity to explain the role of brokers.
The inquiry will investigate the practices of the insurance industry that impact small businesses and consider whether small business insurance products are fit for purpose.
“My office has heard a number of complaints from small businesses regarding poor behaviour by insurance companies,” Carnell said.
“Small businesses that have held insurance policies for over a decade without a single claim have been refused renewal. Others have discovered their renewal cost has more than doubled.”
“We know of cases where small businesses with current policies have been subjected to major changes that have reduced their coverage without consent, and with no refund of premiums.”
The insurance inquiry will target a range of issues affecting small businesses including:
- The availability and coverage of insurance policies provided to small business
- Insurance policy affordability
- The role of brokers in getting the right coverage
- Contract changes that have not been agreed to and whether they amount to Unfair Contract Terms
- Timeliness of insurance payouts and effectiveness of dispute resolution frameworks
- The effectiveness of relevant codes of conduct and legislation, including if applicable penalties are adequate
“Insurance for small business is a practical and legal necessity,” Carnell continued.
“Small businesses can’t operate without public liability insurance but we are seeing entire industries either denied or facing unacceptably high charges.
“It’s a major issue that is forcing some small businesses to close.
“This creates a serious risk to Australia’s economic recovery at a very precarious time.”
A final report on the inquiry is expected to be released by December.