The small business ombudsman has proposed a further expansion of the Hazards Insurance Partnership, which was formed to address affordability and disaster resilience issues.

The partnership, comprising government and industry representatives, was recently broadened to include an additional insurer and two major reinsurers, but the Australian Small Business and Family Enterprise Ombudsman wants further additions.

“We consider that a more diverse array of voices would prove beneficial,” it says in a Senate inquiry submission.

“We recommend that HIP be expanded to include members from international insurers and reinsurers, as well as boutique Australian insurance companies to continue to gain insight from insurance innovations.”

The partnership convened for the first time in February last year, met most recently on May 21 and is next scheduled to meet on August 29.

The ombudsman says many small businesses in regions at risk of natural disasters find it increasingly difficult to obtain affordable cover, particularly for commercial property and, in some areas, public liability.

“Unlike households that, for various reasons, might choose to be uninsured or underinsured and have options about the level and nature of the risk protection policies they subscribe to, a small business must have insurance covering areas such as public liability,” it says.

“If a small business isn’t insured, it cannot engage in trade and commerce. Many small and family businesses are individually doing what’s being asked of them but are seeing no benefits to cost and availability of insurance cover.”

The ombudsman says insurers should clearly articulate what policies cover, what is required by small businesses and how they can work with the industry to address concerns, while benefits from risk mitigation should be shared.

The submission recommends raising the cyclone reinsurance pool’s $5 million sum insured limit for small business property policies and says the government should investigate an expansion to cover all declared emergencies including floods and fires.

The ombudsman, which has also made a submission to the General Insurance Code of Practice review, reiterates its view that code protections given to retail consumers should apply to small businesses.

“As with households, most small businesses do not have the in-house expertise to understand complex insurance products and, given other cost pressures, may not have the resources to seek professional assistance regarding their insurance needs,” it says.

“Furthermore, nearly half of outstanding small business debts are secured by residential property, meaning that not only are the challenges that households and small business face similar, the welfare of the two groups is closely tied together.”

Other recommendations include introducing measures for communities in high-disaster-risk areas under “an agreed, co-ordinated, multi-government and agency strategy”. These could include a government-backed reinsurance vehicle, priority for mitigation spending, interest-free loans for asset protection and property enhancement, and tailored insurance products, including “like for right” coverage, where rebuilds improve resilience.

The submission backs support for discretionary mutual funds, where appropriate, and says the Australian Prudential Regulation Authority should review whether its rules for insurance-linked securities – an alternative to traditional reinsurance – are appropriate to encourage investment.

The Senate select committee examining climate risk impacts on insurance premiums and affordability has received more than 50 submissions and will hold its next hearing in Sydney on September 20. It is due to report by November 19.