Prescribed burning contractors are an example of where risk management and clear information can lead an underwriter to provide cover for a sector after perceptions have been changed, Marsh broker and risk adviser Stephanie Schutte says. 

Ms Schutte told a commercial lines affordability and availability session at the Insurance Council of Australia (ICA) Annual Conference that prescribed burning contractors, who play a key role in reducing bushfire risk around properties and communities, had struggled to gain cover. 

“It’s a perfect example of where maybe the insurer approach to looking at the risk for that sector wasn’t really thought out, in how it could affect the rest of their portfolio, or communities,” she said. 

Ms Schutte said the contractors had formed an industry organisation, worked to bring best practice to the forefront and had liaised with Marsh and the ICA on the issues facing the sector. Controlled burning benefits also had to be clearly differentiated from uncontrolled wildfires. 

“We worked to educate the insurers on their actual risk rather than their perceived risk,” she said. 

The sector has also moved to create a recognised bushfire “red card” qualification to demonstrate that staff meet standards and are able to complete works in a safe manner, she said. 

Ms Schutte stressed the benefit of working with a broker who understands the client’s business and can advocate to insurers around the positive elements of the risk. 

“If you’re shopping around or you’ve got a broker who’s consistently changing account managers, it gets lost in translation,” she said.  

Australian Small Business and Family Enterprise Ombudsman Bruce Billson told the session that problems remain for the amusement, active leisure and recreation sector, which has not succeeded in gaining government assistance for a proposed discretionary mutual. 

“There is market dysfunction in this space. I don’t use the word market failure, because it’s arguably the market functioning from the idea of those offering the insurance,” he said. “It is entirely dysfunctional for those seeking insurance. It’s simply not available.” 

Mr Billson says benefits offered by mutuals include the pressure on peers to have risk management systems in place that meet requirements, so as not to undermine the collective. 

“It’s not much good you having exemplar risk management strategies, and you being an outlier within the group within which insurance risk is being assessed and judged,” he said. 

Mr Billson also spoke about the importance of integrated government and private strategies that can support risk mitigation and provide cover, without creating “moral hazard” by incentivising people not to take resilience action.