Business insurance premiums will increase this year according to insurer Suncorp who warns it will hike premiums as a result of the high cost of last year’s natural disasters.
Rob White, spokesperson for Suncorp, told SmartCompany that business owners will face increased insurance bills as insurers raise premiums to recoup the costs of severe weather events.
“It’s across the industry, it is not just us we are talking about, there is still some fallout from the major catastrophes that occurred, so obviously there is higher insurance costs in that,” says White.
White said the Queensland floods, earthquake in Christchurch, New Zealand, cyclones, and a hail storm in Melbourne on Christmas Day had all hit the insurance industry hard.
Flat international bond markets are another factor behind the predicted rise in business insurance premiums.
“Insurance makes its profits from investing in bonds and so on, and bond yields and the international markets are pretty flat at the moment. If anything they are going down, so obviously we need to recoup the costs,” says White.
The warning from Suncorp comes after the group’s commercial insurance arm reported 11.7% growth in gross written premiums for the year to June.
White says the extent of the premium hike is likely to differ from product to product and he could not give an estimate of how much premiums are likely to rise.
He says there is no set date for when the premium rise is likely to come in and there is nothing businesses can do to secure cheaper rates in the meantime.
“What business should do is look at what risks they face in their particular areas; one area a lot of businesses overlook is management liability,” says White.
“Since the financial crisis, management may find themselves being sued and they do not have the appropriate cover.”
White says another issue that businesses need to look to address is under-insuring, which is “a rampant problem” for businesses.
“Businesses may be happy to spend extra money on their plant upgrades or wages but begrudge an increase in insurance, and when they do have an issue they find they are underinsured,” he says.