The cost of insurance is changing, here’s why

It’s been a challenging few years, from natural disasters like bushfires and floods to navigating the COVID-19 pandemic. While all of this pushed insurance prices up, things are looking up and we’re seeing premiums start to stabilise.

The costs for insurers rise

KPMG Australia found that gross written premium – which is the total value of the policies insurers write minus costs such as stamp duty – went up by 5.9 per cent in 2020.

There were various reasons behind this, such as the lower-than-usual demand for compulsory third party (CTP), travel and employers’ liability policies. 

The significant premium increases reflected these drastic changes in the market. While they are stabilising now, many small businesses are still paying a relatively high price for certain insurance types. 

Those in the building industry would be familiar with this if they have recently tried to take out affordable public liability cover. Many business owners have also seen the increase in prices for property insurance, commercial property insurance and professional indemnity insurance firsthand.

If you are in this position, talking through your options with an insurance advisor could help point you in the right direction.

For businesses finding it difficult to get cover, another option is to implement a different type of risk management, known as a mutual. This approach comes with its benefits and holdbacks – while providing an alternative for getting protection mutuals also have discretion around paying claims.

Before moving forward with this option, it is important to ensure you are well versed in how mutuals work.

There can be some waiting involved when making a claim with mutuals. So if you are a small business and rely on a swift payout from your insurer to get operations back up and running, they may not always be well suited to your needs. Though if you are a larger business – with more resources to continue trading while waiting for your sizeable claim to be paid – this option may be more viable.  

There is a myriad of options available, and an insurance advisor can assist you in finding those that are a good fit for your business’ needs. If this article has brought up any queries about your cover, get in touch with your insurance adviser. 

We can work with you to make sure you get the appropriate level of protection.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.