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Small business ombudsman calls insurance inquiry

The Australian Small Business and Family Enterprise Ombudsman has called an inquiry into insurance practices affecting SMEs after receiving complaints about soaring premiums, difficulty obtaining cover and poor behaviour.

“Small businesses that have held insurance policies for over a decade without a single claim have been refused renewal. Others have discovered their renewal cost has more than doubled,” Ombudsman Kate Carnell said.

“We know of cases where small businesses with current policies have been subjected to major changes that have reduced their coverage without consent and with no refund of premiums.”

Ms Carnell says concerns have been highlighted about classes including trade credit cover, public liability and insurance for continuity of business operations.

“We fully understand that there are some challenges in the insurance industry globally in underwriting, but the reality is this is impacting upon small business significantly,” she told

“We have had lots of issues raised with us by the SME sector and on that basis we have decided we need to have a look at the space and see if there are issues impacting on SMEs' capacity to operate and grow and what the solutions might be.”

The terms of reference include coverage denials, policy exclusions and how they are communicated, use of definitions that may create de facto exclusions and the fitness for purpose of market offerings.

The inquiry will look at any impact of the “current market’s lack of diversity in insurance providers, underwriters and types of insurance”, price increases that amount to coverage denial and Government models of support or control in Australia and internationally that facilitate access to cover.

The role of brokers, unfair contract terms, dispute resolution frameworks and the effectiveness of relevant codes of conduct and legislation are also included.

Ms Carnell says businesses that have experienced problems are invited to complete an online survey and the inquiry will be seeking submissions and liaising with the insurance sector.

“We certainly haven’t jumped to any conclusions,” she said. “We hopefully would work with the sector and if there are issues that need legislative changes that would help, then we can encourage Government to take those on board.”

The Insurance Council of Australia (ICA) says it will assist the Ombudsman with her inquiry.

“Insurers continue to support Australia’s small business sector through the pandemic and natural disasters, on top of normal business operations,” ICA spokesman Campbell Fuller told

National Insurance Brokers Association CEO Dallas Booth says he is not aware of poor behaviour by insurers, but underwriters have been reviewing their risk appetite and pricing, particularly in areas such as public liability.

“It is a very difficult and challenging insurance market at the present time and brokers have been working very hard over the last few months, particularly for the June renewals,” he said.

Mr Booth says there may be a need for discussions involving affected sectors and insurers to gain a greater understanding of the risks and possible mitigation measures to ensure cover remains available.

The ombudsman’s final report will be completed before the end of the year.