The six-week reintroduction of stage three restrictions in Melbourne is testing the resilience of general insurance brokers and their clients, and will slow the nation’s fledgling economic recovery.
The latest lockdown in parts of Victoria, which contributes a sizable 22% of the national economy, was revealed on Tuesday afternoon and took effect at midnight yesterday.
Many businesses have had to close again, including gyms, beauty salons and entertainment venues.
“The speed of the change has probably caught everyone a little bit off guard,” Scott Leis, Head of Broking at Insurance House, told insuranceNEWS.com.au.
“I have absolutely no doubt that some of our clients will be majorly impacted by this shutdown. It is certainly going to have a broader, long and ongoing impact. It will slow any sort of recovery down on a national level as well as a local level.”
Brokers agree hospitality, the arts, travel and tourism are hardest hit, and say the effects may be long term as fragile buyer confidence takes a hit.
They are also conscious that there is a lot of temporary stimulus in the economy and the “true impacts” of the pandemic won’t be exposed until that help fades.
“That is the uncertainty,” Mr Leis said. “I am not sure anyone really knows how this is going to play out and we have probably potentially not seen the full impacts of what that will mean.”
He says that with fewer people moving around, purchasing products and buying clothes and coffees, retail and services will struggle.
“As the pandemic lingers and then it is prolonged, the resilience of all of us will be tested, but particularly businesses which require us to be active,” he says. “For us it is a case of being really nimble.”
Insurance House, which employs about 80 at its offices in East Melbourne and specialises in SMEs, contacted every client as the pandemic first struck and Mr Leis says it is committed to staying connected and giving clients education and advice.
In the outer Melbourne suburb of Dandenong, new McLardy McShane South East joint venture partner Shane Brady says client enquiries went “through the roof” in March when the unprecedented lockdown measures were first introduced, but only a handful of clients have called this week.
Most have involved upcoming renewals and checking that coverage previously arranged isn’t affected by the latest lockdown.
Mr Brady says many businesses won’t reopen as they are under so much financial pressure, and notes the crowds and business associated with sport – from local games to the huge crowds AFL bring to the city – has suffered.
“People forget there are a lot of different flow-on effects, from suppliers to caterers. I can’t see how we are going to avoid really severe impacts in hospitality and retail, in particular. They, more than just about everybody, are suffering really badly.“
Mr Brady says it “doesn’t take much to rock people’s confidence and the public tighten their belts and stop spending, and as soon as we do that there’s a lot of industries that really, really suffer”.
Working across several states with differing lockdown rules is another challenge for many brokers and creates uncertainty not just for business in Victoria but also for all accounts.
National Insurance Brokers Association CEO Dallas Booth says the Melbourne lockdown has the capacity to impact on broker’s businesses, and his members are taking it week by week, doing the best they can for each client transaction.
“We were all hoping the country would be preparing to loosen up,” he said. “For Victoria, that’s going to come to a stop again; it will all be deferred.”
Still, some brokers have reported increased levels of enquiries as a result of heightened risk awareness. Mr Brady says the crisis should also highlight the value of broker expertise.
“A lot of times in insurance we talk about the ‘ifs.’ Now some of these things we brokers have been saying for years might start to resonate.”
Original Article: Insurance News