Insurance Australia Group (IAG) welcomes the opportunity to contribute to the Inquiry into Small Business Insurance being held by the Federal Parliamentary Joint Committee on Corporations and Financial Services.
Our submission responds to the Terms of Reference, outlines how small business insurance operates across our retail and intermediated channels, and provides recommendations to support stronger, more sustainable outcomes for small businesses in Australia.
IAG has Australian origins dating back more than a century and is one of the country's largest insurers. It is because of this longstanding commitment to our communities that our brands, including NRMA Insurance, CGU and WFI, serve as an essential partner to thousands of homegrown businesses, helping them prepare for, respond to and recover from unexpected events.
Insurance is critical in enabling businesses to operate with confidence. We see our role as an enabler for small business to remain viable, protect livelihoods, meet regulatory requirements and also to absorb shocks during severe weather and unexpected loss.
The changing risk environment
The risk environment is changing. Natural disasters are occurring more frequently and with greater severity, and modern risks such as cyberattacks are an emerging risk exposure for small businesses. These pressures are occurring against a backdrop of broader economic headwinds including labour constraints, construction and supply chain challenges, persistent inflationary impacts, and an increasing regulatory burden.
IAG is aware of the market challenges and opportunities for small businesses. We conduct research and advocate for practical measures to reduce risk, while working to help small businesses understand and manage challenges unique to their business and industry.
Cyber Insurance
In a new survey conducted by IAG, more than 70% of small businesses surveyed identified cyber protection as their most important future cover need.
IAG is responding to these needs in innovative and practical ways. To address cyber risk IAG has introduced solutions such as Cylo, a product that combines IAG's cyber insurance expertise, with monitoring and cyber incident response, helping small businesses identify cyber risks early, reduce exposure and minimise the impact of cyber incidents.
We've also provided stronger protection against rising flood risk for our customers through the automatic inclusion of flood cover under Property and Business Interruption cover types from NRMA Insurance.
This submission will explore these risks and our response, and other ways IAG is acting to support small businesses.
Recommendations
We also propose 5 recommendations which call for detailed consideration in the following areas of policy:
1: Resilience Continued Government investment in risk mitigation infrastructure, particularly in areas at high risk of natural perils
2: Regulation Simplification of regulatory obligations to reduce complexity and duplication while maintaining strong consumer and small business protections
3: Rates Addressing taxes that increase the cost of premiums
4: Reform Tort reform and a review of civil liability settings
5: Readiness Further measures to improve access to, and awareness of, resources on insurance for small businesses
As part of the Inquiry process, we have invited the Committee to visit IAG's 24/7 Major Event Command Centre in Hurstville, NSW. The Centre provides real time insights, advanced event mapping and rapid assessment capabilities that support small business and other customers with targeted responses to severe weather events, capabilities increasingly relevant as natural hazards intensify.
