The Insurance Council of Australia has outlined “immediate actions” the ACT government can take to help address rising insurance costs, particularly for small businesses and not-for-profit organisations.   

ICA says an inquiry into insurance costs in the ACT this month “presents an opportunity for the government to take action to address barriers to businesses and organisations accessing the insurance protection they need”. 

The peak body’s submission says insurance premiums across multiple product lines have increased significantly “to the point where high insurance costs now threaten the viability of some small businesses”. 

It wants ACT tort reform settings brought into line with other jurisdictions to promote greater public liability insurance availability and affordability.  

“The ACT has the most open civil liability of any jurisdiction in Australia,” the submission says. “Without reform ... a reduction in public liability insurance premiums appears difficult to achieve.”  

The ICA has repeatedly called for a national review of tort law and civil liability arrangements, and says social inflation and a rise in compensation claims for psychological injury have driven up claims costs and impacted public liability coverage in industries such as amusements, tourism, leisure, live music and hospitality. 

ICA also wants the ACT workers’ compensation scheme to be better aligned with other jurisdictions, especially in relation to common law access, legal costs and journey claims. 

“There are no statutory limits on plaintiff legal fees in the ACT workers’ compensation scheme. The ACT is an outlier in this regard with other jurisdictions regulating and capping the availability of legal fees,” the submission says. 

ICA says all levels of government in the ACT should review their procurement and contracting arrangements to ensure insurance requirements are reasonable and appropriate for the work/activities being undertaken. It also recommends ceasing use of contractual indemnities that transfer risk to third party businesses, community groups and not-for-profits. 

Finally, the submission urges increased funding to strengthen the resilience of homes and businesses, and reviewing land use planning to ensure development does not occur in high natural risk peril areas.    

“Over the past 12 years the increasing cost of extreme weather events has contributed to a deteriorating and unsustainable gross loss ratio for home and property insurers. This has led to a prolonged period of unsustainable unprofitability for insurers’ home and contents insurance portfolios. In order to restore a level of profitability, insurers have had to significantly increase premiums,” ICA says. 

See the submission here.