After 20 years arranging insurance for Indigenous corporations and communities across the Kimberley and Pilbara, Peter Newbound (pictured), an independent insurance professional and former principal of WA Insurance Brokers, has a blunt assessment: The market that serves Indigenous communities is thin, expensive and largely invisible to the insurers writing it.
"It's hard - very limited markets," Newbound told Insurance Business. Property in the north-west has always been difficult to place, he said. While there appears to be no shortage of underwriting agencies across Australia that claim to cover hard to place risks, only a handful, said Newbound, have genuine appetite. The capacity that does exist often runs through Lloyd's of London and outcomes depend heavily on finding an underwriter who cares about the class.
That scarcity has a price. Newbound recalled reviewing one community program placed by an international broker where the property rate ran to about $1.20 - equivalent to the cost of a high risk property and above what he considered justified. This particular cover, he said, came with a $5,000 broker fee charged on top of commission.
"The rates were okay but they should be paying less - that's the bottom line," he said.
The irony, in his experience, is that the business can perform. Some 20 years ago, insurer CGU ran a dedicated Indigenous package covering liability, property and workers' compensation and Newbound said its Kimberley book ran at under a 10% loss ratio before the insurer withdrew from the property side. Reinsurance exposure is real in cyclone country, he acknowledged, but the risks are insurable - and profitable - for insurers prepared to understand them.
The problem, Newbound argued, is that most never do.
"I'd prefer them to go on a trip with the brokers and understand the risks," he said. Underwriters assessing communities from capital-city offices, he said, often have no idea where a community actually is - assuming it sits just beyond the metro fringe rather than, say, along the Canning Stock Route. His own practice was to photograph every asset and send the images to insurers, effectively acting as their eyes and ears.
The exposures themselves are broader than many brokers expect. Beyond the standard suite of public liability, property, motor and management liability, Newbound placed cover for community airstrips - an exposure he said many brokers never identified - and, in the Pilbara, for biodiesel manufacturing, fuel depots, roadhouses and tyre and mechanical workshops, bringing environmental impairment liability, dangerous goods extensions and transit cover into play. Contracts for services to mining operations added waivers and indemnity exclusions that few brokers, in his view, properly review.
Remoteness compounds everything at claim time. Newbound believes underinsurance is worse in Indigenous communities than across comparable SMEs - steel, freight and labour costs have surged and contractors are hard to attract to remote sites at any price. His approach was deliberate: Better to overinsure than underinsure because the marginal premium is small against the rebuild risk. During his career, Newbound has found many local examples of the protection gap widening across Australian property and of the affordability pressures the ACCC has documented in northern Australia's concentrated insurance market.
Newbound's answer to understandable local scepticism about insurance fees was structural: Rather than charging each community separately, he shared the costs of his annual Kimberley trips across clients, keeping individual fees low. He backs the transparency push now embedded in the National Insurance Brokers Association's (NIBA) evolving code disclosure requirements. "I could always justify my fees," he said. But none of it works from a desk.
"You can do retail shops in and out on a computer, but these types of risks you need to be on the ground," Newbound said.
Until more insurers make the trip, he suggested, communities will keep paying for a market that prices what it cannot see and wear the cost of a remote economy where cover is scarce and expensive.
