After quite possibly the worst year on record for beauty salons, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell has handed down her Insurance Inquiry final report. And it doesn’t look good for salon owners.
In fact, Ms Carnell has gone so far as to declare the insurance industry is ruining the small business sector.
“Our Insurance Inquiry has revealed we are in the grip of a national crisis that is killing small businesses,” Ms Carnell says. “The local insurance market has been hardening for years as insurers adapt their risk weightings to increasing threats. As a result, far too many Australian small businesses are on the brink of collapse because they cannot secure a range of insurance products necessary for their operation.”
Ms Carnell’s Inquiry found a large number of small businesses – including salons – had been denied insurance outright or their premiums have as much as tripled in just a few years, effectively pricing them out of the market.
“We’ve had an overwhelming response from the small business community, many of whom told us that insurance is one of their largest expenses and a lot are under-insured. Hundreds of small businesses have told my office they face closure if insurance remains unavailable to them. In reality, it means thousands of small businesses are likely impacted and there could be dire consequences for the Australian economy if left unaddressed.”
The report recommends a series of checks and balances to readdress the risks taken on by insurers and make small business insurance products more accessible.
Ms Carnell said many small businesses had reported misconduct from insurers with most common complaints including late notice of renewal terms and price hikes.
“For a significant number of small businesses, insurance has become a daily stressor and a major reason for considering closure.
“Ultimately insurance is a necessity for small businesses to operate, which is why it is vital these products are fit-for-purpose and accessible so they are protected when things go wrong,” Carnell concluded.
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