Small business ombudsman Kate Carnell will shortly launch an inquiry into the insurance industry in the wake of its treatment of clients during the COVID-19 pandemic.
Small business has been hit hard in sectors like trade credit insurance where big insurers like QBE have overnight cancelled business because it was looking to be uncommercial.
Trade credit insurance is taken out by companies to ensure customers pay for goods and this includes small companies supplying bigger buyers like Myer and David Jones.
Post-COVID, QBE has decided the cost of trade credit insurance for suppliers to both retailers is uncommercial.
Stock market investors are apparently unfazed by the losses, with QBE saying today it would report a first half loss of $US750 million and yet its stock price rose 1.7 per cent to $9.83 a share.
The same trend was evident in the US overnight, with United Airlines reporting a big loss but its stock price rising because the market is looking at forward earnings.
The pandemic is perceived to be yesterday’s news, which explains the reaction to the big loss from QBE.
Insurance broker NCI releases a quarterly index of trade credit insurance, with the latest quarter the worst for seven years.
The index measures the amount of claims, the amount collected, so-called nil endorsement - where insurance is denied - and overdue returns.
The insurance industry has had a tough time during COVID and its customers an even worse time, because having paid premiums for years when they actually want to make a claim they have found the insurance company has a loophole.
The question customers want answered is what is the point of insurance if the provider simply hides behind closed doors when they are needed.
That is the issue today.
Small business in particular is affected which explains why Carnell is holding an inquiry into the industry, aimed at working out just what has gone wrong and what can be done about it.
QBE is regarded as one of the more aggressive operators but one of the problems in the industry is it is highly concentrated, which means consumers have little choice between suppliers.
The small business ombudsman is a statutory body with the power to conduct inquiries with the aim of educating and assisting small business people. It helps negotiate better terms and service with bigger companies.
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