Insurance Insight January 2021
Welcome to our first edition of 2021. For many, 2020 presented unprecedented challenges and the start of the new year has brought tentative optimism, though the threat of new waves of COVID-19 and the impact on lives and business weighs heavily.
As we wait to see what the “new normal” will look like in the months and years ahead, one industry that has borne the brunt of the pandemic is insurance. The advent of COVID-19 compounded an already hard insurance market and securing cover has become more challenging. In this edition, we look at ways business owners can meet this challenge.
It is during such difficult times that the value of a trusted insurance broker comes to the fore. A recent report has revealed just how important brokers are and we share the findings.
With the announcement of the Trans-Tasman travel bubble, business travel between Australia and New Zealand may recommence, but employers will need to place a heightened emphasis on their duty of care. We offer some tips to help them meet that obligation.
We also explore the issue of workers’ compensation for gig economy workers, how property owners and builders can help build stronger disaster resilience and, in our EBM Finance column, we detail the finance options to help businesses secure cash flow in these uncertain times.
We hope you enjoy this edition of Insurance Insight.
COME FLY WITH ME
When COVID-19 hit, business travel virtually ground to a halt. As borders begin to re-open, there are key considerations for business owners before sending employees away.
HARD VS SOFT
The insurance market is cyclical and at the moment it is firmly in the ‘hard’ stage. This means it is increasingly difficult to secure cover at renewal time or when taking out new policies. Despite the challenges, there are ways to help get the cover your business needs.
COVID-19 knocked many businesses for six, bringing uncertainty and cash flow issues as the fallout from the pandemic struck. As business recovers, cash flow is still an issue for many. EBM Finance can help find the right finance solution to help re-start the flow.
The components to mitigating the risks of loss and damage from natural disasters are manifold, but property owners and builders have a crucial role to play.
WORKING 9 TO 5 (NOT)
Recent fatal accidents involving food delivery drivers have shone a light on workers’ compensation insurance – or the lack thereof – for gig economy workers.
THE ECONOMIC VALUE OF INSURANCE BROKING
With an influx of new players into the insurance market – think supermarkets, online retailers, car manufacturers, airlines – the role of the insurance broker as a trusted and expert adviser who can cut through the “noise” and provide value for clients has never been more important.
EBM News & Events
Catch up on the changes to WA's WHS laws, and listen to our latest podcast with Ward Dedman - EBM Chief Executive Officer and Dallas Booth - NIBA Chief Executive Officer on the role and value of insurance broking.
Webinar: WA’s new WHS laws
On 3 December 2020, EBM hosted a virtual workshop on the changes to Western Australia’s Work Health and Safety laws.
Led by EBM’s Chief Operating Officer – Broking, Peter McLachlan and with expert commentary from Piet Jarman from Sparke Helmore Lawyers, attendees gained an insight into the new legislation set to take effect in 2021 and what it will mean for businesses.
Topics discussed included:
- Duty of care obligations now imposed on persons conducting a business or undertaking (PCBU) rather than employers.
- What these changes mean for directors and employees.
- New penalties.
- Introduction of a two-level industrial manslaughter offence.
- The voiding of insurance and indemnity arrangements.
- What the insurance industry is doing to get ahead of these changes.
If you missed the presentation in December or want a refresh, tune into the webinar at https://youtu.be/VHDolyEklKo
Podcast: WA’s new WHS laws
Podcast #04: WA's new WHS laws
In this episode, Piet Jarman from Sparke Helmore Lawyers joins our own Chief Operating Officer, Peter McLachlan and National Manager – Injury Management, Amanda Tulloch to discuss the impact of the new WHS laws which come into effect in WA later this year. We also provide valuable tips for business owners to help prepare for the significant changes the new legislation will have on workplace risk management.
Podcast #05: The Economic Value of Insurance Broking - discussion
Listen to NIBA Chief Executive Officer – Dallas Booth, and EBM Chief Executive Officer – Ward Dedman, discuss the key insights of the report, the role of the insurance broker and the value provided to clients, government, and local community.
Join us at:
🎧 Spotify - https://spoti.fi/3ph8fbR
🎧 Anchor - https://anchor.fm/ebm
🎧 Apple - https://apple.co/2RwKAVm
News in brief
BI test case to go to High Court
Following the ruling on the business interruption test case before the NSW Court of Appeal which found in favour of policyholders in respect to the application of the Quarantine Act exclusions, the Insurance Council of Australia will appeal the decision in the High Court. ICA says it remains of the view that pandemics were not contemplated for coverage under most business interruption policies and it will request the matter be heard as quickly as possible.
Ransomware attacks surge
According to cybersecurity technology firm CrowdStrike, over 67% of organisations in Australia dealt with ransomware attacks in 2020 – surpassing the global average of 57%. The survey also found 33% of Australian companies paid the ransom – costing an average of $1.25M for each breach. Globally, 27% of companies paid the ransom. Business owners should speak with their EBM Account Manager about securing Cyber Liability cover.
COVID-19 top risk to financial stability
According to the Systemic Risk Barometer, a third of survey respondents cited the COVID-19 pandemic as the greatest threat to global financial stability in 2021. Other top risks included cyberattacks, geopolitical risks and global debt.
Measuring insurance affordability
The Actuaries Institute has called for better measures to determine the affordability of insurance. Research from the Institute revealed that households in up to 12% of postcodes (or 7% of the population) might find it challenging to meet their annual home insurance premiums. With a better measure of affordability and better publicly available data, policymakers would have a better understanding of affordability issues and be able to target relief toward those who need it, the Institute said.
New payment times reporting
On 1 January 2021, the new Payment Times Reporting Scheme came into effect. Businesses with an annual income of over $100M are required to report on their payment terms and practices for their small business suppliers. Guidance is available from the Department of Industry, Science, Energy and Resources.
Renovations set to rise
Research from Westpac revealed 31% of Australians plan to renovate their home over the next five years, with 18% already in the process of renovating or planning to do so within the next 12 months. On average each homeowner will spend $82k on the renovation project, with 22% to spend more than $100k. Builders and tradies should ensure they have the insurance they need by talking with their EBM Account Manager.
Bushfire losses revealed
According to independent event loss data organisation PERILS, insurance market losses resulting from the 2019-20 bushfires was $1.866bn.
ICA backs ACCC recommendations
The insurance Council of Australia has welcomed the recommendations of the Australian Competition and Consumer Commission’s Northern Australia Insurance Inquiry and its call for affordable insurance. The three-year Inquiry found that home, contents, and strata insurance premiums in Northern Australia have increased faster than other areas over the past decade, leading to the Commission making 38 recommendations to address the issue in the short, medium, and long terms.
Changes to average weekly earnings
Entitlements for injured workers in the Northern Territory changed on 1 January 2021. Changes to the Average Weekly Earnings include:
- Weekly benefit – the maximum gross weekly benefit after 26 weeks is now $2,552.40.
- Non-Cash Benefits – the gross maximum payable for electricity, meals or accommodation is $595.56 per week.
- Vehicle Running Expense – suggested rate per kilometre of 36 cents.
More information is available from NT WorkSafe
National workers’ compensation claims
Safe Work Australia has published a snapshot of COVID-19 related workers’ compensation claims as at 31 July 2020.
Of note, 533 workers’ compensation claims had been lodged nationally and of these:
- 253 claims had been accepted
- 95 claims had been rejected
- 185 claims were pending
EBM continues to monitor the impact of COVID-19 on all classes of insurance.
If your business is faced with a Workers’ Compensation claim, please contact your Account Manager or EBM’s Injury Management team.
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