Kate Carnell to investigate insurance industry over dodgy small business policies and skyrocketing costs
Insurance companies will come under ASBFEO’s microscope amid claims small businesses are being pushed around by the industry.
The affordability and availability of insurance policies will be examined by small business ombudsman Kate Carnell in a new inquiry targeting SME complaints about dodgy behaviour in the sector.
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) will investigate how the insurance industry treats small businesses, whether insurance products are fit for purpose for independent companies, and whether unfair contract terms are rife across the industry.
Carnell says her office has heard complaints about “poor behaviour” from insurance providers and wants to explore how effective the industry has been for SMEs.
“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,” Carnell said in a statement.
“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 inquiry will target six broad areas, including:
- The availability and coverage of insurance policies offered to small businesses;
- The affordability of insurance policies;
- The role insurance brokers play in the industry;
- Contract changes which haven’t been agreed to and whether they’re unfair;
- Timeliness of insurance payouts and how effective dispute resolution systems are across the industry; and
- The effectiveness of existing legislation and relevant codes of conduct, including existing penalties for wrongdoing.
The ombudsman says the need for insurance has never been greater for small businesses, with the COVID-19 pandemic and natural disasters rocking markets across the country.
But concerns are rising amid a “growing trend” of insurance companies denying small businesses insurance or pricing them out of the market, ASBFEO said.
A final report is due by December. Businesses which wish to participate in the inquiry by offering their experiences can complete an online survey or contact ASBFEO directly.
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