NSW businesses seek other insurance options amid premium affordability challenge
Business NSW has started looking for potential options for its members who are struggling to afford or secure insurance coverage.
The peak body says flood insurance is not the only challenge facing businesses as many are also having difficulties with public liability and professional indemnity covers after insurance providers raised premiums.
Executive Director David Harding says many have demonstrated their resilience by taking steps to de-risk their operations, but these decisions have in many cases not prevented spiking premiums which have been often rising at a rate four times that of inflation.
“Whilst there may be a strong case for prioritising resilient infrastructure and making more sensible planning decisions, these might not always translate into lowered premiums anytime soon,” Mr Harding said.
“We believe businesses should have access to cover that includes immediate financial support, provides an alternative to government funding, and can be incorporated with minimal regulatory impact.”
While Business NSW backs the Federal Government’s allocation of $22.6 million over four years to reduce the cost of insurance in disaster-prone areas, the peak body believes it needs to explore other models as reliance on public funding is not sustainable.
The peak body has started embarking on an engagement process with NSW businesses to investigate other possible options that offer better outcomes for members.
“Through surveys, workshops, and outreach programs we aim to identify whether there is a critical mass of businesses that have risks not covered by traditional insurance products,” Mr Harding said.
“We are also exploring what products might offer practical and sustainable alternatives for our fast-changing local risk profiles.”
Mr Harding says the recent deal struck between the NSW Government and Resilience Insurance to offer new apartment buyers ten years’ protection against defective building work is an example of “innovation that can happen when government and industry work together.”
As previously reported, the Perrottet Government approved the application of a decennial liability insurance (DLI) offering from Resilience Insurance as a form of security under the Strata Building Bond and Inspections Scheme.
Since 2018 developers have been required to lodge a building bond as part of the scheme with NSW Fair Trading that is 2% of the relevant contract value to pay for rectification costs of any defective works that are uncovered for up to 24 months after construction has been completed.
