Small businesses in Northern Australia to benefit from Federal Government reinsurance pool

Small businesses in Northern Australia will potentially benefit from more affordable insurance premiums under a new Federal Government scheme to launch next year.

Backed by a $10 billion Federal Government guarantee to cover cyclone and flood damage across areas north of the Tropic of Capricorn, the reinsurance pool is expected to reduce premiums by more than $1.5 billion for households, strata and small businesses in the region over 10 years.

Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Bruce Billson has welcomed the plans, saying that the scheme, which is broadly in line with a recommendation in ASBFEO’s Insurance Inquiry from late last year, will make a significant difference.

Billson advised “this is certainly a welcome step in the right direction when it comes to ensuring essential insurance coverage is accessible to small businesses.

“Our Insurance Inquiry revealed that small businesses have been crippled by rising insurance costs and some can’t get it at all.

“A reinsurance pool will go some way to addressing this key barrier for small businesses in Northern Australia.”

However, recognising barriers still exist for SME insurance coverage in other parts of Australia, Billson added "in the course of our Insurance Inquiry, we spoke to over 800 small businesses - about 12% of those were from Northern Australia.

“That means there are still many small businesses out there experiencing difficulties with accessing necessary insurance coverage.

“My office is ready and willing to work collaboratively with the government, relevant agencies and the insurance industry towards making essential insurance products affordable and accessible for small businesses across the country.

“Ultimately insurance is a necessity for small businesses to operate, which is why it is vital these products are accessible so they are protected when things go wrong.”

Image: Damage to tourist accommodation at Queensland's Dunk Island caused by Cyclone in Yasi in 2011.