Brokers have been left relatively unscathed by insurers’ premium deferral offering for coronavirus-affected SMEs because very few clients have taken it up, the National Insurance Brokers Association (NIBA) says.

Suncorp, QBE and Allianz unveiled Australian Competition and Consumer Commission (ACCC) approved measures in early April, and IAG had already announced its own similar plans.

As insuranceNEWS.com.au has reported, NIBA feared deferral of premiums could hit brokers’ own cashflows and force some out of business.

But in a submission responding to the ACCC’s interim authorisation of the scheme, NIBA says take-up of the offer – which expires at the end of June – has been slow.

“NIBA members have discussed this proposition with clients, and the current experience is that relatively few clients have taken advantage of this offer,” the submission says.

“The key issue is that if the client is struggling to meet the cost of the insurance cover at the present time, there will be a real doubt as to whether the client would be able to fund 100% of the premium cost in six months’ time.”

NIBA says most clients prefer to pay instalments, either direct to the insurer or, as is more often the case, via a premium funder.

“The consistent view expressed to NIBA by insurance brokers is that it is invariably more beneficial for the client to have the capacity to pay their insurance premium over time,” it says.

The submission also raises concerns over insurers’ indication that if a claim was paid while the premium was deferred, the premium cost would be deducted from the claim payment.

“Insurance brokers are concerned that this could severely limit the effectiveness of the insurance cover if the cost of the claim is not fully met at the time the loss occurs.”

NIBA says widespread acceptance of the deferral could put the viability of small brokers at risk “as most of their revenue comes from commission since their clients usually pay little by way of fees”.

But it says if take-up remains slow then the “level of detriment to insurance broking firms…will remain limited”.

NIBA says it welcomes the moves by insurers to support SME clients.

But it also notes that “it was not consulted before the application for interim authorisation was submitted to the ACCC”.