The Australian Small Business and Family Enterprise Ombudsman Kate Carnell says she is concerned about a growing trend of insurance companies denying small businesses insurance and pricing them out of the market, launching an inquiry into insurance affordability and availability today.
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,’ said Ms Carnell.
‘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,’ said Ms Carnell.
‘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 is expected to be released by December.