Home / Daily / Coronavirus fallout: brokers brace for upheaval
20 March 2020
Insurance brokers fear the next few months, or probably longer, could be very challenging as the worsening coronavirus outbreak in Australia inflicts heavy damage on the economy.
A number of brokers interviewed by insuranceNEWS.com.au expect some impact on the broking sector, in the form of reduced demand for their services in the face of an abrupt slowdown in business activity and by an inability to actively engage with clients needing their services.
“I think it is likely that most brokers will potentially be affected in some way,” Dianne Phelan, Group Operations Manager with BJS Insurance Group, told insuranceNEWS.com.au today. “There are going to be clients who may, unfortunately, lose their businesses.
“Any reduction in insurance needs is going to have an impact on revenues. So yes, I think brokers themselves need to be engaging their risk management plans that they will have or should now have in place for this eventuality.”
About 29% of businesses surveyed by SME-focused consultancy Cameron Research say the virus outbreak has already had a significant impact on their operations and more than 50% predict problems over the next three months.
An unnamed insurance broker told Cameron Research in another survey he had been shortlisted to present a big business tender but the project has been put on hold until next year. The tender was potentially worth about $450,000 in terms of fee income.
“His point is that business is slowing and everything is being put on hold and delayed, and I think that is absolutely what we will see,” Cameron Research CEO Ross Cameron told insuranceNEWS.com.au.
“In times of uncertainty, everything goes into a slowdown and that is probably reflective of what brokers will find.”
Ms Phelan, who is also Vice-President of the National Insurance Brokers Association (NIBA), says BJS has a contingency plan in place and is acting on it.
“We have a committee that is meeting every couple of days as things unfold and we are implementing our plan as needed,” Ms Phelan said.
NIBA is having a board discussion this afternoon to assess the situation, CEO Dallas Booth told insuranceNEWS.com.au.
“I want to assess what the current situation is across brokers. They are all facing very challenging times.”
Mr Booth says brokers are caught in a bind by the crisis. In line with the Federal Government’s “social distancing” rules to curb the community spread of the coronavirus, many brokers have cut back on their face-to-face meetings with clients.
“That has challenges in terms of being able to work effectively and efficiently,” Mr Booth said. “Brokers’ primary role is to service and help their clients and we’re already seeing very significant disruptions to small businesses.
“We need to get a handle on what is actually happening. We have a massive conflict of policy in that on the one hand, the health authorities say ‘stay at home, don’t go anywhere, don’t expose yourself’.”
“From the insurance industry’s point of view, we’ve got 170,000 claims [from the catastrophes this summer] that need to be resolved and $1.9 billion worth of claims to be paid, but that can’t happen if everybody is at home and things are really stopping.
“So we have this contradiction at the moment.”