Home / Daily / Brokers ‘left high and dry’ by IAG announcement
31 March 2020
General insurance brokers say they fear for their future after IAG’s decision to announce a series of measures to assist coronavirus-impacted small businesses.
As previously reported, the National Insurance Brokers Association (NIBA) was talking with the Insurance Council of Australia (ICA) and premium funders about developing an industry-wide position to “support communities” during the COVID-19 outbreak.
But on Friday IAG unveiled its own measures, in advance of an industry announcement, including deferred premium payments for up to six months for small businesses experiencing financial hardship.
Brokers have contacted insuranceNEWS.com.au to say that if SMEs don’t pay their premiums for six months, intermediaries’ cash flows will dry up, but they’ll still be expected to provide services to clients and insurers.
NIBA says these concerns could have been ironed out if an industry-wide position had been persevered with, and criticised IAG for going early.
“Brokerages will require a full operation to continue to process the renewals, claims and adjustments to cover over the coming months and incur the relevant wages and expenses, [but] they won’t get paid for six months,” one broker said.
“So these businesses will experience more hardship than the businesses that are receiving the reprieve.”
The fear is that if, as expected, other insurers follow IAG and there is widespread take-up of the payment deferral, then brokers themselves could go under.
“NIBA had been working with ICA and a number of major insurance companies to develop an insurance industry response to the COVID-19 challenges,” NIBA CEO Dallas Booth told insuranceNEWS.com.au.
“The announcement by IAG effectively meant the opportunity for an industry response was lost.”
NIBA says brokers are currently receiving “significant contact” from clients, with many discussing cancellation of cover.
“Insurance brokers will be called upon to assist SME businesses with their insurance needs for the next three to six months, even if the premium payable to the insurer is deferred,” Mr Booth said.
“Brokers therefore need to have the means to stay in business, and to remain viable during these difficult times.”
NIBA says its board is “examining these matters daily” and will continue to liaise with the premium funding industry.
“There are a lot of complex issues that need to be considered in how we might support SME clients, and how the initiatives announced by insurers need to be implemented,” Mr Booth said.
“It is critical that ways are found to maintain the viability of insurance brokers so that they can continue to support, advise and assist their clients in the coming months.”