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Affordability

Why is insurance affordability so important? 

Insurance plays an essential role in the economy, and affordable insurance is central to resilient communities.

Our members recognise that access to appropriate levels of insurance cover is a crucial to supporting our communities and national economic recovery and growth.

Committed to addressing affordability

Insurers share a commitment to addressing insurance affordability and availability over the short and long-term and the ICA works closely with all levels of government and consumers to help communities understand risk and work towards practical and meaningful solutions.

Why have some premiums been rising?

Insurance prices reflect the level of risk within a given market. Different types of insurance will therefore be priced differently. 

Generally speaking, premiums tend to be lower and stable where there is competition, freely available reinsurance and known risk factors. As insurance works by pooling risk, insurers cannot have a concentrated exposure to any one source of risk and the level of premiums is one way they can manage their exposure.

In recent years, our changing natural environment has impacted the cost of insurance in parts of Australia. Catastrophic natural events have damaged or destroyed property worth tens of billions of dollars. This has been most recently visible in the Australian bushfires of 2019-20 and floods of 2021 and the increasing frequency of these events poses long-term questions for the insurance industry and the Australian community.

Reviews into insurance affordability

Two prominent reviews have taken place into insurance affordability in the last two years:

  • ACCC Northern Australia Insurance Inquiry  
  • Role of the Private Insurance Market –Independent Strategic Review: Commercial Insurance

ACCC Northern Australia Insurance Inquiry

Concentrated impact in northern Australia

Catastrophic natural events impact different parts of Australia in different ways. In northern Australia, the increasing scale and frequency of claims due to cyclones and flood has raised costs and rendered the insurance market unprofitable over a long period of time.  This focus was the subject of recent reports, including:

  • ACCC Northern Australia Insurance Inquiry(released in December 2020)

Findings of ACCC Northern Australia Insurance Inquiry 

Over three years, the ACCC conducted a wide-ranging inquiry into the supply of residential building, contents and strata insurance in northern Australia.

The final report, released in December 2020, concluded that “the higher risk of natural disasters in northern Australia is driving higher premiums” and suggested that “reforms to land use planning and building standards may offer the best hope for achieving sustainable and equitable improvements to insurance affordability in northern Australia in the future.”

Role of the Private Insurance Market – Independent Strategic Review: Commercial Insurance

An independent report was commissioned by the Insurance Council of Australia and led by industry expert John Trowbridge in collaboration with economist Michael Blythe. A draft was released in May 2021 and the final report, including 13 recommendations, was released on 20 September 2021.

The final report concluded that in the context of a hardening insurance market there is no one-size-fits-all solution to issues of affordability and availability for small business sectors, and that solutions require collaboration and goodwill between the insurance sector, the SME sector, and governments.

The Review’s recommendations broadly fall into three categories: improved engagement between insurers and the SME sector; better understanding of insurance by SME policyholders; and advocacy to government and transparency. The ICA supports all recommendations of the Review.

Submissions to the ICA

Access submissions to the ICA for the ‘Role of the Private Insurance Market –Independent Strategic Review: Commercial Insurance’

Public liability insurance

When and Why You Need Public Liability Insurance for Small Business

If you are a small business owner that makes or sells products or interacts with the general public, it is important to consider obtaining public liability insurance. Lawsuits could have a detrimental effect on any industry if a business isn’t adequately insured. 

Public Liability Insurance 

This type of insurance covers general negligence, causing injury, as a result of your business. It is designed to protect your business against claims from accidents or injuries as well as accidental damage to property owned by someone else. A business owner or sole trader is accountable for customers, suppliers and anyone else who has involvement in the business. This should not be confused with professional indemnity insurance, which covers negligence in your business’ service.

If an accident or injury occurs your business may be liable for hefty legal fees as well as covering the cost of the damage or injury caused. If you are conducting business activities in public spaces, have people visit your work premises, work at other people’s premises or even manufacture goods your business may have legal liability in the event of damage or personal injury. Public liability insurance is the best defence against property damage or personal injury. 

Examples of claims:

A small toy business makes a toy that has a sharp edge and injuries a child playing with it. The parent may then make a claim against the toy business for the injury caused by the defective toy. 

If the toy business didn’t have public liability insurance they may have to foot the bill for legal fees and any other compensation.

A shop owner cleans their floors. It is mostly dry besides a small patch. A patron then enters the store and slips. The patron may make a claim against the business in the case of injury. 

This is another example where it is important to have the correct amount of public liability insurance cover for any legal fees and compensation.

Level Of Cover

Having an adequate level of insurance cover for your business needs is vital. Many events that occur leading up to claims being made towards businesses are unforeseen. Being sued for negligence can be costly to your business and have long-lasting negative impacts. It is important to find out exactly how much cover your business needs, as some industries require a certain level of cover in order to legally operate.

The Real Cost Of Public Liability

Although public liability insurance is not compulsory, by law, in Australia, some industries and occupations require business owners to obtain a policy. Depending on where you live you may be required to have public liability insurance in order to operate. 

If you hire a public venue you may also be required to obtain a policy in order to hire the space. Public liability insurance provides you with peace of mind in the unfortunate event of an accident or injury to another person in your workspace. Not having adequate cover could have a costly effect on your business. It may be in your best interest to engage with a business insurance consultant to decipher what kind of policy would suit your business.

Engaging With A Business Insurance Consultant

Public liability insurance cover is commonly purchased with the assistance of insurance brokers who specifically specialise in business insurance. Business insurance professionals have the ability to find a policy to suit your specific needs. They have the skills to negotiate insurance policy contracts and review relevant product disclosure statements.

Business Insurance Consulting offers a highly professional service for your business liaising with insurance companies, providing you with insurance quotes and can assist in finding you the right level of cover. If you have any enquiries regarding business insurance or to discover the optimum cover for your business contact Craig at Business Insurance Consulting today.

Business insurance coverage

Why Every Business Owner Should Have Business Insurance Coverage

There are plenty of risks when it comes to running your own business. Accidents and incidents can happen from injuries to natural disasters. Having insurance to cover your business for unforeseen events is vital. 

Insurance is the optimum defence to protect your assets including business and personal. Here are important reasons why every business should consider business insurance cover. 

Maintain Your Reputation

Having adequate insurance cover can help to maintain your reputation in the business world. Professional indemnity insurance, liability insurance and workers compensation insurance can all contribute to being insured appropriately.

A business insurance consultant has the ability to assist you in deciphering the most beneficial insurance for your business needs. From the policy details to the terms and conditions a professional can analyse these factors and point you in the right direction when it comes to business insurance.

Prevent Cash Flow Loss

Cash flow is incredibly important for businesses to stay afloat during quieter periods. Something as small as machinery breakdown could impact your cash flow if your business doesn’t have access to the right insurance option. For small businesses, this business interruption could come as a major blow. 

For example, a plumber may incorrectly fix a pipe for a restaurant due to human error. If the restaurant is then forced to shut its doors for any period of time the plumber could be liable for any damages to the restaurant’s regular takings. This has the potential to ruin a business due to a genuine mistake. This only reinstates why business owners should seriously consider taking out business insurance.

Therefore finding an insurance company that offers relevant insurance for your personal business needs is key. In an adverse event, you will no longer need to utilise your business’ cash flow and can instead rely solely on your insurance cover. 

Ability To Survive If Disaster Strikes

In Australia alone, it is not uncommon to experience floods, bushfires and even storms. In the event of a natural disaster or incident, a business’ premises could be completely destroyed. That is why it is important to go through an insurance policy with a fine-tooth comb to make sure that you will be adequately covered if an incident were to occur. 

Digging into your own personal finances may not be practical in cases like these and there is always a chance of disaster striking again if you do. Therefore to be prepared and fully insured in the first place is the optimum scenario, to begin with.

Obtaining business insurance is dire to maintaining your reputation within your industry, preventing a loss of cash flow and recovering from disaster with minimal costs. There are plenty of cover options when it comes to business insurance and there is a policy to suit every business owner.

Finding the right business insurance for your needs doesn’t have to be a daunting experience. For more information about insurance cover for your business contact Craig at Business Insurance Consulting. With help from Craig, you will be able to make an informed decision and have peace of mind that you are covered for any unforeseen events.