Home / Local / A better way? Broking leader criticises lack of consultation on SME support
6 April 2020
Insurer measures to support virus-affected SME clients by deferring premium payments are “well-intentioned” but not the best solution, AUB Group CEO and MD Mike Emmett says.
As reported last week, insurers Suncorp, QBE and Allianz have announced a joint Australian Competition and Consumer Commission-approved scheme to assist COVID-19 impacted customers, including the option to postpone premium payments for six months. IAG had already announced its own similar measures.
But Mr Emmett says if brokers had been consulted he would have suggested an alternative plan to spread premium payments rather than defer them.
“The first we knew about what was actually in the ACCC package was when it came out,” he said.
“The problem is that after six months, will these SME businesses be any more able to pay the annual premium? They won’t be able to access premium funding at that stage – it will be too late.
“If they can’t pay and decide to cancel, then the insurer is still going to want six months’ of premium.
“Simply moving the payment date just creates other challenges at that point.”
Mr Emmett believes there is a simpler way.
“Personally I would have designed a monthly payment scheme,” he told insuranceNEWS.com.au. “If we can spread the impact rather than deferring it, that is better. The cashflow impact can be more easily managed and everyone could have used it.”
Mr Emmett says broker concerns about the impact of the premium deferral on their own operations are genuine and significant.
“A lot of brokers are SMEs, so you are just shifting that cashflow problem from one set of SMEs to another,” he said.
“For a business the size of AUB Group there are cashflow implications, but for smaller brokers it could be a death blow.”
The National Insurance Brokers Association (NIBA) said last week it is “critical” that ways are found to maintain the viability of brokers.
Following the ACCC authorisation, CEO Dallas Booth called for greater clarity around how it would work.
“There are a number of aspects of the ACCC authorisation, and the insurer proposal, that will need to be clarified,” he said.
“Most importantly, the need for insurance brokers to notify the ACCC before participating in the program needs to be clarified.
“NIBA is making inquiries about how this is intended to occur and what procedures will need to be followed.”