Most premiums paid by Australian SMEs for policies placed by the
Austbrokers network fell or remained flat between the June 2013 and June 2014 quarters.
An analysis of 200,000 policies placed through the Austbrokers network of broker owner-drivers found that an average business pack policy fell 2% in the last quarter of the financial year.
Price falls were also said to be experienced in other types of insurance such as liability policies (down 7%) and private motor vehicle insurance (down 5%).
While price reductions are seemingly positive news for SMEs, the research highlighted that most SMEs do not have sufficient business interruption or cyber liability cover, leaving them potentially exposed to significant risk or even business failure.
Austbrokers managing director and CEO
Mark Searles urged small business owners to take advantage of the more competitive market to adequately insure their businesses.
“Over the past year the soft insurance market has led to more competition which in turn is driving down the cost of basic insurance for small business. Yet despite these savings opportunities, the majority of SMEs are uninsured or under-insured.”
Searles was referring to industry-sourced research that found up to 70% of Australian businesses don’t have adequate insurance cover.
“With premiums expected to remain soft for the remainder of this year, now is a great time for business owners and managers to review their insurance arrangements with their broker and consider additional policies to reduce their overall risk.”
While not revising prior earnings guidance to the market, Searles said that despite downward pressure on individual premium pricing, Austbrokers’ total policy count for the most common business pack insurance was up 6% during the period.
“It is pleasing to see that despite a soft market, our broking network has continued to grow both financially and in size," he said.
Searles said a strategy of income diversification had contributed to Austbrokers' resilience in the softening market, by focusing efforts into specialist underwriting and risk management services.
The Austbrokers distribution network comprises of 50 brokerages representing over 320,000 clients with in excess of $2bn of gross written premium.
