The IT channel has been branded a "high-risk" industry by insurance companies, with resellers finding it increasingly difficult to renew their policies -- even if they have never made a claim.
Queensland-based reseller Townsville CADS was almost forced to shut up shop after its insurance company, Allianz, refused to renew its policy. Owner Jenny Healy took the policy out years ago through Colonial Insurance Company and has never made a claim, yet the renewal for burglary and public liability insurance was knocked back.
"It's amazing how quickly things change," Healy said. "When my renewal came up last year, I received a letter saying how happy they were to have me as a customer. This time they didn't even notify me, and the only answer I could get was that it was due to a change in underwriting policy'.
"I wasn't even asking for product or professional liability."
Public liability and professional indemnity cover have been singled out as the big trouble spots. However resellers are also facing trouble with general insurance cover because they service the IT market.
An Allianz spokesperson said the company no longer offered liability insurance to the IT industry.
"For IT-related businesses we continue to offer property cover on a case-by-case basis, but we no longer offer liability cover," said a spokesperson for the company. "The main reason is in assessing the potential upper limit of exposure for data loss and/or business interruption for customers of the insured. We continually assess and review our risk acceptance criteria rates and we may offer liability insurance to IT businesses again at some future time."
According to Sandie Watson, national public affairs manager for the Insurance Council of Australia, a rise in claims for public liability and professional indemnity has forced insurers to reassess the cover they offer.
"It is a real issue. Insurers have been losing a lot of money in recent years and they need to be viable, particularly with new regulations coming in next month," she said.
No particular group has been singled out by the insurance industry as high risk, according to Watson, who advises resellers to shop around, or engage an insurance broker.
"If resellers go to another insurer, they will be able to get cover, although it probably won't be at the same premiums as their previous cover," she said.
Healy was eventually able get cover with another insurer, but not before she was knocked back by another company.
"They thought I was fine until they found out I was in the computer industry," she said. "In the meantime, I've wasted a lot of time and it has caused a lot of agro."
The Insurance Council of Australia (ICA) is currently lobbying the Federal and State Government to find a solution as quickly as possible.
In an industry where service level agreements have become the norm, insurers have become unwilling to plunge into waters that haven't been legally tested.
"The IT industry is one of those that is unfortunately exposed and as people discover more ways to sue, it opens up more risk," said Watson. "It makes it less attractive to insurance companies to take that on."
The trouble is, small businesses have become the meat in the sandwich. There is also a need for uniformity on a national basis to prevent "forum shopping" in states where laws are not as tight. The ICA is advising companies to identify potential insurance risks within their businesses while a long-term solution is put in place.
Townsville CAD has already taken that path. Its store is electronically alarmed, and is equipped with noise and motion detectors, breaking glass alarms, alert sirens and lights, and a back-to-base connection with Chubb security systems.
Healy believes there needs to be more accountability within the insurance industry.
"The Government has got to start looking at this," she said. "If I couldn't get cover, I would not have been able to open my doors. Without public liability, you just can't afford to trade."