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Ombudsman calls out small business insurance woes

The struggles regarding public liability insurance for small businesses have led many of them to close down, according to small business ombudsman Kate Carnell.

Ombudsman calls out small business insurance woes
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  • Adrian Flores
  • January 25, 2021
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Ms Carnell has previously highlighted the issues surrounding access to insurance for small businesses through the ASBFEO Insurance Inquiry last year.

“Throughout the course of our inquiry, hundreds of small businesses told my office they face closure if insurance remains unavailable to them,” she said.

“Small businesses have told us they have either been denied insurance outright or their premiums have as much as tripled in a few years, effectively pricing them out of the market.”

As a result, Ms Carnell recommended the New Zealand model of public liability insurance where it applies statutory caps on liability for personal injury. 

Further, she also urged the government to implement the Productivity Commission’s recommendation to roll out a no-fault National Injury Insurance Scheme (NIIS) to cover lifetime care for catastrophic injuries.

“It’s been nine years since the Productivity Commission released its Report into Disability Care and Support and yet the NIIS is still under consideration, much to the detriment of the small business sector,” Ms Carnell said.

“Ultimately, the risk environment for public liability litigation can only change through government intervention and the current framework of fault-based injury compensation creates uncontrollable risks for insurers and small businesses.”

Unfortunately, Ms Carnell also recounted a recent example of Barra Fun Park in Townsville, which is closing its doors after 20 years of operation.

She said the business owner, Brent Stevenson, cannot find an insurer willing to renew his public liability insurance.

“In the two decades Barra Fun Park has been operating, there has only been one insurance claim against his business. The claim resulted in a $70,000 payout to a patron who sustained an injury (hyper-extended thumb) at the park. Brent subsequently saw his insurance premium nearly triple and paid the annual fee, only to be shut down for six months due to COVID restrictions,” Ms Carnell said.

“This is not just one isolated incident — we know there are many small businesses, particularly those offering recreational activities such as caravan parks with splash zones and jumping pillows, that are in the same boat.”

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