Australia: SMEs at risk of insurance gaps due to inflation
Source: Asia Insurance Review | Jun 2023
SMEs in Australia may be at risk of gaps in their insurance coverages due to inflation, leading to a potential ‘serious financial crisis’ according to insurance service provider InsurTech BizCover.
Losses due to storms, fires and other significant events could result in insurance claim pay-outs that don’t cover the total cost of replacement due to the difference between what the business has insured and the cost to rebuild.
BizCover head of product, channel and risk Jane Mason said even as data suggests inflation has likely peaked in Australia, the remnants of double-digit inflation growth for construction input costs to reach all-time-high levels could still leave small business owners with significant holes in their business insurance.
According to property data business firm CoreLogic, the overall price of building construction rose by close to 12% over the course of 2022, meaning if one insured a building in December 2021 the cost to replace that building may be dearer than planned. A