A number of insurers in Australia have stopped offering rent default cover in residential landlord policies in response to the coronavirus outbreak, which has already led to massive layoffs in many industries.

The move comes amid fears renters may be forced to default if the virus-induced economic slump deepens.

Hollard has suspended the sale of Tenant Default cover and reduced the coverage for existing customers who want to renew their policies.

“These actions have been taken in response to changing economic conditions which have fundamentally altered the risks associated with the product,” a Hollard spokesman told insuranceNEWS.com.au.

“This will also enable us, as far as possible, to continue to offer Tenant Default to existing customers at affordable premiums despite the inevitable financial losses we will incur on this product.

“We will closely monitor the rapidly changing external environment so we can continue to act responsibly to respond to evolving market conditions.”

Allianz says it has temporarily ceased offering rent default cover for new business while that element of its landlords policy is reviewed.  

IAG has placed an embargo on rent default cover for new landlord policies sold through its CGU and WFI brands. The move does not impact existing customers.

“Rent default continues to be available for existing customers on renewals,” a spokesman for IAG told insuranceNEWS.com.au.

The spokesman says the indefinite suspension of new sales across its NRMA, SGIO and SGIC brands remain in place.

Suncorp also confirmed its brands have stopped selling landlord insurance until further notice.

Bricher Insurance Brokers MD Glenn Stevens has hit out at the insurers’ decision to drop rental default cover for customers who intend to renew their policies, calling the move “opportunistic” in light of the current economic crisis.

“I don’t have a problem with the new business side of things, but if they have a current policy in place and they have had it for a number of years, I really don’t see why the insurance companies should not be morally obligated to offer renewals as it is,” he told insuranceNEWS.com.au.

“In my opinion – and I’ve been pretty forceful on this with the Hollard representative – they are making a morally ambiguous judgement based on their own pockets and leaving clients in the cold.”