SMEs access to COVID relief options from insurers until 30 June 2020

On 2 April 2020, the Australian Competition and Consumer Commission (ACCC) issued an interim authorisation to insurers under the Competition and Consumer Act 2010 (Cth) to implement certain relief measures for Small and Medium Enterprises (SMEs) suffering hardship due to COVID-19: See: link.

An SME for the purpose of this authorisation is an individual, partnership, company or trust that is carrying on a business and:

- employs fewer than 20 employees (or 100 if a manufacturing business); and
- has an aggregated annual turnover of less than $10 million.

The authorised measures apply to eligible insurance policies or supply arrangements that are current up to and including 30 June 2020 and authorises the participating entities to do the following.

  1. Offer their SME clients who:
    1. are experiencing financial hardship from the impact of the COVID-19, the option to elect to defer premium payments for up to 6 months.
    2. need to respond to significant changes in revenue due to the impact of the COVID-19, the option to cancel their insurance policies and receive a refund of all unused premium with no administration or cancellation fees.
    3. need to close their insured business premises due to the impact of the COVID-19, continuing cover on such premises with no changes to premium.
  2. Offer all clients (including consumer and larger businesses) who can no longer travel as planned due to the impact of the COVID-19, a credit or refund for any unused travel insurance premium with no administration or cancellation fees.
  3. Reduce payment times for SME suppliers and contractors of these insurers to no more than 15 days.

The measures authorised are available to eligible clients on an opt-in basis and with the clients self-assessing whether their businesses have faced hardship due to COVID-19 without the need for further verification.

The authorisation extends to different types of insurance products including association motor insurance, building or property damage insurance, liability insurance, directors and officers liability insurance, business interruption cover, professional indemnity insurance, public and products liability insurance, theft cover and equipment breakdown cover.