Insurance premiums for small businesses have risen by up to 60 per cent since 2019. The Insurance Council of Australia (ICA) says liability laws, legal costs and government red tape are contributing to the increase.
“Too much of what should be going to injured people is being eaten up by legal costs, delays and red tape,” ICA CEO Andrew Hall said.
“It’s been a quarter of a century since anyone properly looked at these laws, and the case for reform is overwhelming.”
Hall said affordable insurance allows small businesses and community organisations to operate. When a local cafe or community sports club cannot obtain cover, the local community faces the impact. He said reform could reduce costs while maintaining compensation payments for injured people.
ICA said it has been 25 years since the last national review of liability laws. Over that period, rising claims costs, legal fees and system inefficiencies have affected the cost of public liability and professional indemnity insurance for small businesses and community organisations.
In a submission to the Parliamentary Joint Committee’s inquiry into small business insurance, ICA set out a reform program. Proposals include a national review of liability laws, limits on legal costs in claims and changes to claims processes.
The organisation also proposed a national ban on “claim farming”, defined as cold-calling or pressuring people to lodge injury claims.
ICA said government procurement rules should change so small businesses are not required to obtain insurance beyond operational needs or accept liability for risks that cannot be insured.
The organisation also called for funded risk management programs to help small businesses and community organisations reduce risk exposure and manage insurance costs.
ICA said it welcomes the committee’s inquiry and will work with all levels of government on reforms related to insurance for small businesses.
