National Insurance Brokers Association of Australia (NIBA) President, Eric Harris, promoted the role of brokers and called for vital reform at the Senate Finance and Public Administration References Committee Inquiry: Lessons to be learned in relation to the Australian bushfire season 2019 – 2020.
Harris from Aon was joined by NIBA NSW Representative, Rebecca Wilson from Austbrokers ABS and NIBA CEO, Dallas Booth.
He said, “Insurance brokers provide advice, assistance and advocacy support to individuals, small medium and large businesses, and to large corporates and governments across Australia. Insurance brokers act for an on behalf of the client, and have legal and professional duties to act in the best interests of the client at all times.”
Harris pointed out that the NIBA submission to the committee has outlined the gross inequity, unfairness and negative incentives of the funding model for the emergency services in New South Wales. The Emergency Services Levy on insurance premiums in the state, in addition to GST and stamp duty, increases the cost of property insurance for private homes by over 40 per cent, and for commercial property by around 70 per cent.
He stated empatically that this has a massive impact on the affordability of insurance cover, and the capacity of property owners to take out appropriate levels of insurance cover adding that a number of Royal Commissions, independent inquiries and reviews have called for the abolition of this levy.
Put simply, the emergency services are provided to all property owners in New South Wales. Only those who take out insurance contribute to the cost of those services. This is unfair, inequitable, and creates a massive disincentive to take out appropriate levels of insurance cover. It results in very serious levels of non-insurance and under-insurance at times when the support of the insurance industry is most needed.
Harris urged the committee to support the reform of emergency services funding in New South Wales, consistent with reforms already introduced in other States and Territories over the past 20 years.
He said, “In relation to possible measures to reduce future bushfire risk, we reference the excellent work of the Productivity Commission in relation to the funding of natural disasters in Australia. Very little is spent on prevention managing the risk of large losses. As a result, governments have to spend billions after the event to communities recover.”
He also made a comment in relation to efforts to help communities recover from the bushires, “In early January 2020, over 150 insurance broking firms indicated a desire to help those affected by the fires with their insurance claims, at no cost to the people involved.”
Harris also suggested that we need to have ready, in advance, a “single source of truth”, from a Federal Government agency and an agency of the relevant State or Territory, which provides all relevant community support information – government and non-government – in a quick, reliable and accessible manner.