On 28 July 2020, the Australian Small Business and Family Enterprise Ombudsman launched an inquiry to investigate the practices of the insurance industry that impact small businesses and consider whether small business insurance products are fit for purpose.

There is a growing trend of insurance companies denying small businesses insurance or pricing insurance policies out of reach. In this new operating environment, small businesses that have held insurance policies for over a decade without a single claim are being refused renewal, or if offered renewal are discovering the cost has more than doubled. Many businesses with current policies have been subjected to unilateral changes that have reduced their coverage without consent, and with no refund of premiums.

The inquiry targeted 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.

The final report makes a suite of recommendations designed to rebalance risks taken on by insurers and make small business insurance products more accessible.

A major recommendation included in the report is to expand the Australian Reinsurance Pool Corporation to provide reinsurance for all natural disasters on commercial property insurance.