Insurance companies on notice for denying insurance to SMEs

The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has announced that her office will launch an inquiry in light of concerns regarding the rise of incidences involving insurance companies either denying insurance coverage to small businesses or offering them cover at a rate they cannot afford.

“My office has heard a number of complaints from small businesses regarding poor behaviour by insurance companies,” Carnell said. “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.

“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.”

The insurance inquiry will investigate issues affecting small businesses including:

  • The availability and coverage of insurance policies provided to small business.
  • Insurance policy affordability.
  • Contract changes that have not been agreed to and whether they amount to unfair contract terms.
  • Timeliness of insurance payouts and effectiveness of dispute resolution frameworks.
  • The effectiveness of relevant codes of conduct and legislation, such as if applicable penalties are adequate.

“Insurance for small business is a practical and legal necessity,” Carnell said. “Small businesses can’t operate without public liability insurance but we are seeing entire industries either denied or facing unacceptably high charges. It’s a major issue that is forcing some small businesses to close.”

Small and family businesses that have faced difficulties with their insurance companies are encouraged to complete an online survey at the ASBFEO website, the results of which shall form part of the findings for this inquiry. The final report is expected to be released by December this year.

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