Business NSW says its members have named insurance as their biggest negative cost driver. The independent, member-based organization has called on the government and industry to explore alternative models.
“As insurance premiums increase and risk becomes more ‘uninsurable’ or unaffordable through existing market mechanisms, we are at a moment when government, partnered with industry need to consider alternative models so that we remain globally competitive,” said Business NSW CEO Daniel Hunter.
Hunter called on market innovators to engage with Business NSW “to drive change.” He said their research suggests the problem is “much bigger than just insurance costs.”
The wider trends around insurability, he said, include premiums escalating year on year from 20% to over 100% in some cases, product exclusions rising and insurance sub-segments exhibiting market failure because risk is either uninsurable or unaffordable.
“There’s no doubt that businesses need the ability to protect against catastrophic loss. Without these protections, business owners become personally liable which in turn makes NSW less globally competitive,” said Hunter.
He said the NSW government and business “has led the world in financial service innovation.” The CEO said the current situation is an opportunity to re-think how business can obtain coverage.
“Business NSW is currently exploring ways to improve the system whether it be through legislation, discretionary mutual funds (DMFs), other insurance alternatives and other policy settings that ensure the sustainability and resilience of NSW businesses,” he said.
Hunter said there’s an urgent need for government and industry intervention and reinvention that will likely require new legislation “to ensure businesses can continue to operate.”