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Insurance industry moves to ease business struggles
Rising premiums and hurdles faced by businesses and consumers trying to buy insurance have triggered national inquiries in the past couple of years and calls for action have recently risen to a crescendo.
SME businesses in catastrophe-prone areas have been particularly hard hit, with holiday and amusement parks finding it almost impossible to find underwriters willing to take on their risks. Other sectors are also finding cover hard to obtain.
As brokers we’ve been right alongside out clients, and it has been tough. Insurers have been badly affected by massive natural catastrophe claims and pandemic-related issues, while the investments they rely on for much of their revenue – and insurers are among Australia’s largest investors – are producing crushingly low returns.
This has caused a rebalancing of the insurers’ appetite for risk, which is why negotiating policies for new risks or higher-exposure risks have been so frustrating.
So it’s good to be able to note that the insurance industry has decided it’s time for some fresh thinking, with availability of cover a vital requirement not only for businesses but also the economic future of the country.
The Insurance Council of Australia this year embarked on a broad-ranging review, commissioning widely respected former regulator John Trowbridge to examine the commercial market, with the aim of finding practical solutions to affordability and availability problems.
His report, released in September, offered recommendations that have been accepted, and action is underway to help address some of the most challenging issues facing SMEs.
A new Business Advisory Council will work through availability and affordability issues with the industry, focusing particularly on professional indemnity, public liability and business interruption cover, looking at market “gaps” and evaluating risks and potential solutions.
The advisory council will liaise with the Insurance Council board, which includes the CEOs of Australia’s largest insurers, with our national body, the National Insurance Brokers Association (NIBA), also having a role to play.
The Trowbridge report notes that in the current hardening market there’s no one-size-fits-all solution and collaboration and goodwill between the insurance industry, business sectors, and governments will be required.
Other proposals include giving plenty of notice before renewals when major changes are looming, providing more details on reasons for significant premium increases and making sure any mitigation measures or changes that could improve the situation are outlined.
The review also recommends a working group, drawing on both insurers and customers, to look at simplifying and streamlining definitions and documentation for SME policies to make the process easier for the SME sector, and of course our clients.
The activity underway may take some time to deliver benefits and improvements, but the insurers say pressures faced by small businesses are top of the joint agenda. As brokers, our role in assisting with solutions, providing feedback and in helping our clients navigate the way ahead has been particularly recognised.
Having in-depth discussions with us will help us ensure the most suitable cover is obtained and that you are up to date on developments as market conditions and responses change and evolve. We’ll keep you posted on progress.