Complaints are flowing in as small businesses battle insurance providers who are denying cover or simply inflating premiums to levels beyond affordable.
The Inquiry
This week, the Australian Small Business and Family Enterprise Ombudsman announced it will launch an inquiry into Australian insurers’ treatment of small businesses as they have received an increasing number of complaints of “poor behaviour” from customers. The ombudsmen advised it has evidence insurers are ratcheting up premiums or refusing to cover small businesses.
“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,” Kate Carnell said in a statement. “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 inquiry will examine the following:
- The availability and coverage of insurance policies offered to small businesses;
- The affordability of insurance policies;
- The role insurance brokers play in the industry;
- Contract changes which haven’t been agreed to and whether they’re unfair;
- Timeliness of insurance payouts and how effective dispute resolution systems are across the industry; and
- The effectiveness of existing legislation and relevant codes of conduct, including existing penalties for wrongdoing.
The Importance of Small Business Insurance
The most common used asset to secure a small business loan is property. Often this property is the family home, which means for many small business owners, protecting the business is the same as protecting their family and their home.
When the risks become too high, small businesses have no choice but to close their doors. Insurance is the primary way for small businesses to mitigate risk to protect themselves, their families, their customers and their employees. Without appropriate insurance, outcomes beyond the control of business owners can bring severe financial distress and loss of assets.
Small business insurance is intended to help protect businesses from unplanned costs when things go wrong. The Australian Small Business and Family Enterprise Ombudsman says the need for insurance has never been greater for small businesses, with natural disasters and the COVID-19 pandemic rocking markets across the country.
At a time where Australia’s economic recovery is a top priority, the implications on small businesses not being able to obtain basic insurance cover poses a serious risk.
The inquiry will commence this month and a final report is expected to be released by December 2020.
Have your say!
If you wish to participate in the inquiry, click here to complete the Australian Small Business Insurance Inquiry Survey.
