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Leaders hit back over 'failing businesses' claim

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General insurance industry leaders have rebutted a law firm’s claim that insurance businesses will collapse as a result of COVID-19 pandemic claims, disruption and associated global recession.

As insuranceNEWS.com.au reported last week, Sparke Helmore believes “it is almost certain that we will see insurance businesses fail, and quite possibly in significant numbers”.

But broking leaders say there is no evidence to back up the stark prediction, and that insurance is a stable and resilient sector during times of economic strife.

“This is the most erroneous statement I have seen anyone make about insurance,” Steadfast MD and CEO Robert Kelly told insuranceNEWS.com.au today.

“Anybody that would make a statement like that doesn’t understand the role of insurance in the commercial world. I have been through four recessions, and during a recession insurance becomes a very stable purchase.

“From Steadfast’s point of view, and from speaking to our cohorts, we do very well through recessions and we have been doing very well through COVID-19.

“To make statements like this without any factual basis makes me very angry.”

The comment was contained within a report by Global Insurance Law Connect, an alliance of legal firms, for which Sparke Helmore provided the Australian commentary.

Partner Gillian Davidson told insuranceNEWS.com.au the warning is based on the likely broad impact of coronavirus claims, the hit to specialist insurance sectors such as travel insurance and the inevitable recession in Australia and across the world.

She says smaller, niche agencies or brokers are most at risk, rather than large insurers.

But National Insurance Brokers Association (NIBA) CEO Dallas Booth says there is no indication of any such issues.

“We are not seeing any broker firms under stress at the present time,” he told insuranceNEWS.com.au.

“Time will tell over the next few years as to the ultimate impact on the industry and the economy.

“But we are not seeing any real concerns.”