The Australian Small Business and Family Enterprise Ombudsman Kate Carnell has launched an inquiry into insurance affordability and availability following a string of complaints from SMEs.
The inquiry will examine whether current insurance products offered to small businesses are ‘fit for purpose’ and the impact of the insurance industry on the sector.
It comes amid growing concern by the Ombudsman’s office of an increasing number of insurance companies denying small businesses insurance, and complaints from SMEs they are being priced out of the market.
“My office has heard a number of complaints from small businesses regarding poor behaviour by insurance companies,” Ms Carnell said.
“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.”
Ms Carnell said she had also received complaints from businesses whom have had their current policies subjected to major changes that subsequently reduced their coverage without their consent, and without a reduction in premiums.
Among the issues to be investigated are the availability and coverage of policies, policy affordability, the role of brokers, contract changes without agreement and whether this constitutes unfair contract terms. As well as the timeliness of insurance payouts and current dispute resolution frameworks and the effectiveness of codes and conduct legislation.
“Insurance for small business is a practical and legal necessity,” Ms Carnell said.
“Small businesses can’t operate without public liability insurance but we are seeing entire industries either denied or facing unacceptably high charges.”
Ms Carnell added some businesses had been forced to close due to insurance issues, which, given the current post-catastrophic bushfire season, prolonged drought and global pandemic was an added burden to Australia’s economic recovery.
Any small/family business who has experienced difficulties with their insurance company is urged to complete and online service through the ASBFEO’s website.