The inquiry will investigate the practices of the insurance industry that impact small businesses and consider whether small-business insurance products are fit for purpose.
The insurance inquiry will target a range of issues affecting small businesses including:
- The availability and coverage of insurance policies provided to small business
- Insurance policy affordability
- The role of brokers in getting the right coverage
- 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, including if applicable penalties are adequate
In launching the inquiry, Ms Carnell noted concerns about a growing growing trend of insurance companies denying small businesses insurance.
“My office has heard a number of complaints from small businesses regarding poor behaviour by insurance companies,” Ms 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.”
Ms Carnell said she knows 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.
“Insurance for small business is a practical and legal necessity,” she 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. This creates a serious risk to Australia’s economic recovery at a very precarious time.”
A final report is expected to be released by the end of this year.