Despite the spate of catastrophes in recent years many businesses remain underinsured and, with the economic uncertainties, reluctant to maintain the level of cover they need.
This is one of the conclusions of a Suncorp “Insurance Insights” white paper - “After the storm. Can insurers save businesses after disasters?” - released today.
“Businesses’ reluctance in this economic climate to be adequately covered is aggravated by the fact that, post the major catastrophes, many insurers have been forced to increase premiums,” said the author of the white paper, Mr Matt Pearson, Executive General Manager, Claims, Commercial Insurance, Suncorp
“While businesses accept the increase in such costs as purchasing new equipment, they often baulk at ensuring they have the insurance to cover those increases,” said Mr Pearson.
The white paper notes that businesses’ understanding of what cover they need is limited.
“There is a crucial role for the insurance industry to educate businesses about the necessity of proper insurance cover,” said Mr Pearson. “The industry needs to work collectively to demonstrate the value of insurance to businesses.”
The paper notes that, while the spate of concurrent and consecutive natural disasters put an incredible strain on insurance industry, it ironically has seen some positive effects.
“The catastrophes have taught insurers about a new level of response and created new dimensions to review their portfolio of products as they piece together the costs, consider the heightened risks and work out how to deliver to their customers,” Mr Pearson said.
“However, while the insurance industry is proactively ensuring it can help businesses and communities when disaster strikes, governments and local bodies seem to be dragging their collective feet,” he said.
“The need for governments and local bodies to take pragmatic and practical mitigation action to minimise the effects of disasters is now paramount. The litany of disasters in recent times should be a trigger for authorities to proactively take measures to protect risky areas.
“Otherwise, insurers will either become more reluctant to insure various areas or be forced to increase premiums to cover the repeated costs they have to pay out on risk areas being hit time and time again by catastrophic events,” said Mr Pearson.