Small business owners could be saving up to 6% on their insurance premiums according to new data from Australia’s largest equity-based insurance broking network, Austbrokers.
Analysis of over 200,000 policies placed by the Austbrokers network showed most insurance premiums paid by Australian small and medium enterprises (SMEs) fell or remained flat between the June 2013 and June 2014 quarters.
The results show the price of an average Business Pack policy fell 2% in the last quarter of the financial year. Even bigger price falls were 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, research has more alarmingly 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.
Commenting on the research, Austbrokers Managing Director and CEO Mark Searles urged small business owners to take advantage of the more competitive market and reduce the risk posed by not taking out the necessary insurance cover or under-insuring themselves and their business.
“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.”
Mr 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, Mr Searles said that despite downward pressure on individual premiums pricing, Austbrokers’ total policy count for the most common business insurance, Business Pack, 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. SMEs truly see us as a comprehensive and trusted risk services provider. From a Group perspective, it is good to see that Austbrokers’ strategy of income diversification has helped prove our resilience to the softening premiums by focusing efforts into specialist underwriting and risk management services.”
The analysis drew on data from the Group’s unique common broking and analytics platform, which services Austbrokers’ distribution network comprising 50 brokerages representing over 320,000 clients with in excess of $2 billion of gross written premium.
Source: Austbrokers Holdings Media Release, Sydney, 6 August, 2014