Despite the impacts of COVID, Australian businesses have still not put safeguards in place to ensure their viability in another pandemic or natural disaster.
According to new research a large portion of Australian businesses have said they are still concerned they aren’t properly insured, leaving them vulnerable to unforeseen costs should another natural disaster strike.
A new report from Business Australia shows that despite the widespread damage and impact of COVID and the bushfires on Australian businesses, 62% of SMEs still have not taken out adequate cover.
Richard Spencer, Business Australia Chief Customer Experience Officer said business insurance falls into a ’lazy cost’, an administration burden that many SMEs don’t have time to keep on top of.
“If the last year has taught us anything it’s that we can’t assume the future will be fine just because we’ve had a good run,” Mr Spencer said.
“Managing risk is a crucial part of successfully operating a business, which is why insurance is so important.”
Currently 70% of Australian businesses believe they could be doing more to reduce costs of insurance and utilities, while 33% said they struggle to keep pace with the administration of their business insurance policies, according to the Business Australia data.
“Businesses are also reporting that it is difficult to find suitable insurance products, with only 4 out of 10 businesses satisfied with the ease of finding insurance.”
“Underinsurance is also cited as a big concern for SMEs.”
Last year, the 2019-2020 ‘Black Summer’ bushfire season is estimated to have cost Australian businesses around $2 billion in total insurance loses.
There were more than 20,000 insurance claims lodged in Australia due to the bushfires, with many more businesses and individuals left uninsured or underinsured.
The recent Royal Commission into Disaster Arrangements, also referred to as the Bushfires Royal Commission, highlighted that insurance taxes, especially those imposed by state governments, were contributing to affordability issues and underinsurance.
In NSW, Kay Saarinen and her husband watched on as their organic permaculture farm was destroyed by fires which ripped through their property last year. There was around $150,000 in damages, caused by the fires which destroyed crops, irrigation and machinery equipment as well as infrastructure.
The only places spared was their laboratory where their crop is produced – and their home was only partially damaged.
The couple create skincare products from their range of organic herbs grown on the farm. Determined to turn things around, Kay and her husband have set a two-year target to get their operation back on track. So far, they have got their equipment back online and are now preparing to plant their first crop.
Despite being partially insured, the cost of the damage was huge for the family-run operation.
Business Australia has just partnered with Aon as its preferred risk and insurance broker to help businesses navigate the complexities of business insurance. The new referral service will offer a simple and effective option to any Business Australia member who wants to address concerns about insurance, review their current cover or access alternative insurance.
Kevan Johnston, Managing Director – Commercial at Aon said he is excited to build a lasting relationship with Business Australia and work together to ensure businesses of all sizes remain a strong economic force following the COVID-19 disruption.
“Our common goals are to ensure that all Australian businesses remain supported through these times, and that means putting into place the right programs for each business, and helping clients make fact-based decisions around issues such as insurance and risk exposure,” says Mr Johnston.
“For example, we know that the majority of businesses that do not have appropriate insurance do not survive severe and very large losses in business interruption, often occurring from fire, flood or significant storm damage.”
About Business Australia
Business Australia is a free member-owned organisation that provides tools, resources and advice to support businesses of all sizes. Whether a business is just starting out, looking to become more efficient or wanting to grow, Business Australia exists to help them get there. It costs nothing to join, simply register online using an ABN. For more information visit businessaustralia.com.