Home / Local / Act now on affordability, says SME ombudsman
14 December 2020
Australian Small Business and Family Enterprise Ombudsman Kate Carnell says action to improve insurance affordability is needed as soon as possible, with longer-term mitigation unable to deliver immediate relief.
Ms Carnell says measures to address climate change and major construction projects such as levees to improve resilience are a key part of the bigger picture, but many small businesses are facing insurance market failure.
“This is something we have got to deal with,” she told insuranceNEWS.com.au. “These are businesses that need solutions now, next year, not in 20, 30 or 40 years’ time.”
The ombudsman’s insurance inquiry report released last week makes 15 recommendations which include proposals that would see governments taking more of a role in the insurance market and actions insurers can take, including on renewal and claims handling processes.
Ms Carnell says current challenges go beyond normal cycles that are delivering a hard market. Other changes driving rising costs and availability issues include climate impacts, an increasingly litigious culture and building problems highlighted by the Grenfell tower fire in London.
“This is actually market failure, which is the reason why the Government has got to get involved here,” she said.
Recommendations include extending the Australian Reinsurance Pool Corporation’s role to include natural disaster cover for commercial property, capping personal injury liability and moving ahead with a no-fault national insurance injury scheme.
It calls for a ban on conflicted remuneration for brokers and greater clarity on commissions, fees and government taxes in insurance quotes.
The inquiry says the current 14-day statutory notice on renewals is not long enough. Insurers should provide notice of 60 days for a refusal, premium increases above 15% or where there are changes in exclusions and excesses.