NEWS / Industry bulletin
INSURANCE MARKET FAILURE A NATIONAL CRISIS: ASBFEO
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he Australian Small Business and Family Enterprise (ASBFEO) Ombudsman Kate Carnell has handed down her Insurance Inquiry final report, that reveals widespread market failure in regard to the availability and affordability of essential small business insurance products. More than 800 small businesses took part in the insurance survey, describing their feedback as both insightful and concerning Carnell said, “Our Insurance Inquiry has revealed we are in the grip of a national crisis that is killing small businesses.” In addition to the response from small businesses, the report also took into consideration the 20-plus submissions from industry stakeholders. She added, “Hundreds of small businesses have told my office they face closure if insurance remains unavailable to them. In reality, it means thousands of small businesses are likely impacted and there could be dire consequences for the Australian economy if left unaddressed.” The final report makes a suite of recommendations designed to rebalance risks taken on by insurers and make small business insurance products more accessible.
A major recommendation included in the report is to expand the Australian Reinsurance Pool Corporation (ARPC) to provide reinsurance for all natural disasters on commercial property insurance. Carnell also said that the insurance industry urgently requires a mandatory Code of Practice, recommending the Australian Financial Complaints Authority (AFCA) be given additional powers to deliver dispute resolution and enforcement. The report highlights a lack of availability
of public liability and professional indemnity insurance, pin-pointing the unlimited nature of injury claims and potential for large damages as a key factor. She also revealed that there have been reports of poor conduct by insurers, “Including very late notice of renewal terms and price hikes, effectively putting the small business in the position of accepting the terms or being uninsured.” You can access the entire report online: asbfeo.gov.au/inquiries/insurance-inquiry
Above Hundreds of small businesses will face closure if insurance remains unavailable to them.
ACCC RELEASES THIRD AND FINAL REPORT ON NORTHERN AUSTRALIA INSURANCE INQUIRY
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ver the holiday period, the Australian Competition and Consumer Commission (ACCC) released their third and final report of the Northern Australia Insurance Inquiry. Most concerning for insurance brokers was the inclusion of an earlier recommendation from the 2019 interim report which called for the removal of the exemption for brokers under the current conflicted remuneration ban. Although not a new recommendation, it remains worrying for both the National Insurance Brokers Association (NIBA) and its members.
The report also contained a number of concerning findings which confirm anecdotal evidence provided to NIBA by members. NIBA will provide a detailed response to the Federal Government, outlining broker concerns and highlighting the potential impact on brokers and their clients. NIBA strongly believes that these recommendations are unlikely to provide any significant relief to property owners in northern Australia, and will not ease the availability and affordability issues in that market. NIBA CEO, Dallas Booth said, “We will continue to prepare for the 2022 review
of remuneration arrangements in general insurance, as recommended by the Royal Commission. NIBA has already started this process by commissioning the Deloitte Access Economics Report on the economic role and value of insurance broking, and will continue to liaise with government, regulators and other stakeholders on the important work brokers do for their clients and the broader community.” The ACCC indicated they look forward to making submissions to the 2022 review recommended by the Royal Commission, as does NIBA.
For breaking news and updates curated specially for insurance brokers please visit: insuranceandrisk.com.au/category/news/
18 / INSURANCE ADVISER FEBRUARY 2021
