The Covid-19 pandemic has had a significant effect on Australian businesses.
Small-to-medium-sized businesses have been hardest hit, as have specific industries, for example, accommodation and food services.
Some businesses have stopped operating entirely, while others are experiencing huge reductions in demand and turnover.
Many aspects of your business may change, including insurance. You might ask, will my premiums increase or, if I need to make a claim, will I have to wait a long time for it to be processed and will it be accepted?
JMD Ross can connect you with the support your insurer is providing during the crisis. We’ve also addressed some common concerns from businesses and provided common-sense information to help you make better decisions based on your own objectives and business needs.
Will your insurance premiums increase?
Like any business, insurers are seeing a substantial impact on their revenue due to Covid-19, in addition to rising claims costs from bushfires and storms over the past summer. Notwithstanding, some insurers are providing short-term relief through deferred payments and other financial hardship assistance.
Talk to us to find out what your insurer is doing to provide assistance.
Will there be an impact on what you can claim?
While measures are in place to help businesses adjust to the Covid-19 restrictions on trade, it’s important to ensure you’re making claims your business is eligible for. After all, it’s a lot of paperwork if it isn’t going to return a positive result.
Business interruption (BI) cover has been a hot topic in Australia and overseas, as government restrictions prevent many businesses from operating at full capacity or at all.
In Australia, BI insurance usually covers physical damage or loss to the property. There is usually an exclusion for pandemics. While some claims could be accepted, it is unlikely BI cover will support claims made by businesses because of the coronavirus pandemic.
However, the Australian Financial Complaints Authority will take a test case to court to determine whether some insurers can rely on their BI exclusions to deny claims. We will keep you advised on developments.
Increased bankruptcy and the effect on debtors’ insurance
If a global recession occurs, so will an increase in bankruptcies, particularly in industries such as travel and tourism, automotive, textiles, ICT and retail.
With the increased risk of bankruptcy comes a knock-on effect for debtors’ insurance (also known as trade credit line of insurance, export credit insurance and accounts receivable insurance).
Debtors’ insurance protects against the non-payment of debt if your customers are unable to pay their bills or even go into insolvency.
Unless you always receive payments from customers and suppliers upfront, your business is at risk without debtors’ insurance. However, with an increase in claims in this area, it’s likely premiums will increase and restrictions placed on limits, which your business will need to plan and account for.
For more information on Covid-19 and support for Australian business talk to us directly or click here.