The cost of living has been a struggle for Australian businesses and households. Added to this, expect home insurance to rise, typically by about 10%.

We’ll share our tips on reducing the hit to your hip pocket, while still ensuring appropriate coverage.

Why premiums are increasing

The cost of claims is increasing both in terms of frequency & severity.

Everyone’s insurance premium contributes to a pool of funds from which claims are paid out. When the cost of claims increase, everyone is impacted as the premiums that contribute to the pool need to increase, even if you haven’t made a claim on your home insurance.

Meanwhile, inflation often affects insurance costs. Experts say in the wake of the pandemic, inflation may have a more significant effect in the next few years.

The reasons above may prompt a higher premium on your insurance, but under the industry code, insurers should explain why the cost has increased and on their renewal notice provide you with the cost of last year’s insurance premium so you can compare it to the cost for the upcoming year.

Increase your excess

The fast way to reduce your premium is to agree to pay more when claim on your insurance. For example, you might agree to pay the first $1,500 rather than $500, for a claim. So, you wouldn’t lodge a claim unless the value of the item lost or damaged was at least $1,500.

However, you need to ensure you have the funds to pay the excess. Therefore, it is a balancing act between an insurance premium combined with an excess that you can afford to pay.

Estimate the value of contents accurately

The spectre of a higher premium is a useful prompt to review the value of your building and contents. Insurers automatically adjust that dollar value annually. We can help you get that figure right. Don’t risk over or underinsurance, either way, you’ll be out of pocket.

Online home building and contents insurance calculators are a good start, but they can be general. Keep digital records of receipts from your purchases. Ensure the property details, such as room sizes, building materials, and improvements are up to date on the policy.

Typically, policies offer cover so the insurer replaces the item or you get a payout to organise the replacement yourself.

The figures can get rubbery for the cost of replacing the building, either partially or fully. The construction industry’s skills shortage, increasing cost of building materials, and continuing supply chain disruptions add uncertainty. Avoid assuming the rebuild cost will be the same as what you paid for your house.

Keep your house safe

You may already have these measures in place, so consider this list a refresher:

• Regularly test your smoke alarms
• Deadlock doors and windows when you’re out
• Trim vegetation from windows, so burglars don’t use it as cover
• Maintain your plumbing, heating, and electrical systems to lower the risk of water and fire damage
• Consider ways to make your home more disaster resistant, and
• Install comprehensive security with motion detectors, lights, a burglar alarm, and remote video surveillance. This approach can shrink your premium by up to 20%; or by 5% if you only opt for CCTV cameras.

Check with us before you invest in a fully-fledged security system. Policies differ, so some insurers may reward you for your risk management and others not as much. The diversity of policies means it may also be wise to check if your current insurer is giving you the best deal and you’re not paying for extras you no longer need. We’re ready to help review your cover to ensure it serves you well, by comparing these features:

• Premium
• Excess
• Exclusions
• Legal liability cover
• Extended cover
• Cover limits.

Let us guide you on how to protect your home. Getting those measures in place means we’re better able to advocate for a slimmer premium for you. Combining policies or paying premiums monthly may get you a premium discount. We’ll check if your insurer is applying promised discounts correctly, too, such as for a discount due to having multiple insurance policies with the same insurer. Even if you continue with the same policy, we can check how it compares to the rate for new policyholders and ask the insurer to match that price for you. Why pay more for being loyal?

Small-to-medium-sized businesses make up 93% of Australian businesses that export. That’s according to the most recent figures (2020-21) from Austrade’s State of Exporters Report.

The typical small-business exporter had a turnover of almost $5 million and operated in just one market. However, the DHL Export Barometer report found that almost half of all businesses surveyed planned to enter a new market this year.

Going by the number of exporters – of any size – New Zealand, the US, China, Singapore and the UK were the most popular destinations, the report says.

Are Australian exports growing?

Not quite. In April, over 56,177,000 million dollars in exports left Australia, about a five percent drop from the previous month, says the Australian Bureau of Statistics. All categories – general merchandise, rural goods, and non-rural goods – experienced slippage.

Despite this, businesses are increasingly taking advantage of Australia’s free trade agreements. The most attractive FTAs were ASEAN, ChAFTA and AUSFTA for exports to New Zealand/ASEAN, China and the US, respectively. You can find out more about FTAs via this official government portal.

Benefits of exporting

Here’s why businesses export:

• Markets may be more resilient to economic shocks
• Can build sales and brand with steady and sustainable growth
• May spread and diversify their risks by tapping into more than one market for their products and services
• Can tap into more affluent markets than Australia
• Are more likely to learn innovative approaches for a competitive edge
• Can increase their efficiency.

Your business may also benefit from the partnerships your local government authority has with sister cities/countries, as this research shows.

Risks for exporters

The top risks for exporters include:

• Supply chain issues
• Rising freight costs
• Inflation and other hidden costs, such as for specialists, travel, tender preparation, marketing support, staffing, etc.
• Tariffs – erring on paperwork and compliance
• Neglecting to protect intellectual property
• Skipping due diligence on finding new business partners
• Not understanding the local culture in the country to where they’re exporting
• Global and political risks not just in the export country but those with ports that your products will pass through
• Damage to or theft of your goods in transit, or 
• Your items damage a third party’s property or injure someone, such as an employee working with your goods, when they’re en route
• Protracted and complex payment terms
• The importer refusing to pay for your goods despite the terms, credit guarantee, or contract.

Be sure to keep accurate records of your certificates and other documentation. This will make it easier to comply with your obligations to report and disclose information to regulators and trade associations.

Types of coverage

There are insurance options available as part of your risk management. You might be tempted to let a freight forwarder do the transit insurance for you. However, this assumes they have the needed technical and legal prowess.

As the exporter, you’ll be responsible for securing insurance to cover your goods in transit, that is when you sell goods on cost. You’ll endorse the policy cover, thereby assigning it to the buyer/importer. That means they can claim under your policy in their name if the goods are damaged or lost.

For on-off shipments, single cargo export insurance would suit, for multiple, consider annual cargo export insurance. Other relevant policies include credit insurance, marine cover, political risk, currency and product liability. It can get complicated, so be sure to talk to us for insight into what best suits your operations.

As a business owner, you know how important it is to maintain the safety of your work fleet and have clear policies for staff using them. 

The cost of fleet accidents

The social and economic costs of all road crashes in Australia are more than $30 billion each year, according to the Bureau of Infrastructure and Transport Research Economics. It is tricky to narrow down the figures just for fleet or business-registered vehicles, though.

What’s fuelling those overall costs? Part of it is that nine out of 10 Aussie motorists say they regularly daydream behind the wheel, says Monash University’s Accident Research Centre. Distraction is the main reason for 16% of serious crashes needing hospitalisation.

This article explains your and your drivers’ responsibilities to boost your risk management approach.

Employer responsibilities

As an employer, there’s plenty you can do to reduce your risks of a work-vehicle bingle, including:

• Have a written car use policy that you discuss with them, to clarify when, where and how the vehicle can be used, and if a logbook must be filled in
• Be sure to register your work vehicles
• Ensure you have the right comprehensive insurance for your fleet
• Retain copies of driver licences of your staff using the vehicles
• Check that cover for roadside help and whether it’s just for business hour breakdowns
• Program vehicle servicing and maintenance
• Invest in technology to support and (ethically and legally) monitor and give feedback to staff driving your work vehicles. Here’s Verizon’s 2023 guide to fleet tech trends.

As well, check out this fitness to drive policy assessment guide to review your own. Learn more about road safety in the workplace. Here’s how Essential Energy made it an essential part of their business, and another publication about engaging and educating their workers.

If the work vehicle is involved in an accident, employers also have vicarious liability for damages and injuries caused. Work closely with us to lodge an insurance claim, and you should expect the employee involved to fully co-operate, too. 

It’s important to know that when your employee suffers injuries while driving for work, that could trigger a workers’ compensation claim to cover time off work and care.

Employee responsibilities

Employees driving company cars should abide by these rules:

• Read the company’s car use policy closely
• Be clear if they can use the car for personal use and/or out of business hours
• Check with the employer on insurance coverage
• Know who to contact if there’s an accident and what documentation is needed
• Keep the car serviced and clean
• Immediately tell the employer about any damage
• Maintain a driver’s licence
• Follow the road rules. (The Fair Work Commission says employers can sack staff for repeated speeding incidents when driving a business vehicle for work.)

Commercial vehicle insurance options 

The most appropriate policy to protect your business from risks relating to work vehicles is a commercial vehicle or business vehicle/car insurance. Typically, vehicles that carry up to five tonnes, such as trucks, utes, vans, sedans, hatchbacks, forklifts, trailers, and some earthmoving and mobile plant come under this policy.

Often, you can choose your own repairer, or use the insurers nominated repairer and have the confidence of lifetime guarantee of those repairs. You can also insure your work vehicles if an uninsured driver damages them, or if theft or fire is involved. Hire vehicles, lease payout and new vehicle replacement are high-level offerings, too. They’re handy to ensure minimal disruption to your operations.

We can help you manage your risks with the best-fit policy for your business.

It’s important to keep the environmental risks of your building projects to a minimum. Here’s a checklist to help you manage these factors.

Risk #1: Flooding

Understand historical flood patterns and future flood maps. Keep an eye on expanding urbanisation. Buildings and sealed surfaces will impact natural water flows and create stormwater. , that could lead to higher flows. That could lead to flooding away from waterways, too. 

Seek up-to-date information from the local council or state government authority, such as this one in Victoria. GeoScience Australia also has a national flood risk information portal.

Construction-tech company, Procore explains how to protect your project site from flooding.

Risk #2: Contaminated land

Your building site might come with a history of contaminants including:

• Trace elements, such as arsenic, cadmium, copper, mercury, nickel, zinc, lead, etc
• Asbestos
• The banned firefighting foam, PFAS, and other related chemicals
• Chemical solvents, or
• Heavy metals.

These issues may be due to agricultural, chemical storage or industrial activities including gas works, dry-cleaning services, landfill, or ex-petrol stations. This United Nations website explains inorganic or organic compounds that can cause hazards in soil.

Regulation of contaminated land in NSW, for example, comes under the Environmental Protection Authority, via the Contaminated Land Management Act 1997. Planning authorities also get involved under the State Environmental Planning Policy (Resilience and Hazards) 2021 and the Managing Land Contamination – Planning Guidelines. The South Australian EPA has issued an eight-page fact sheet on dealing with site contamination.

Meanwhile, the National Association of Testing Authorities (NATA) assesses and accredits organisations against international standards. Businesses or consultants offering to test the soil on your project site need NATA accreditation – you can find them on the register. Here’s geotechnical guidance for those testing soils and aggregates.

Risk #3: Ground stability

Geotechnical testing will also help highlight how and if historical activities on the site have increased potential environmental risks. Those activities, as well as natural land movements, can pose issues. Beware of:

• Tunnels
• Manmade shafts (such as through mining or quarrying), as well as
• Subsidence
• Sloping land
• Natural land movements
• How existing nearby structures could impact – even redirect – groundwater flow beneath the surface.

Risk #4: Underground assets

Before breaking ground, check in with the free referral service, ‘Before You Dig Australia’ (BYDA). 

However, those infrastructure plans tend to be indicative rather than accurate or comprehensive. This is why even BYDA encourages you to hire a certified locator if there are infrastructure assets near your site, but you can’t find them. You may also have to verify as you go using online tools, such as ground penetrating radar, and GIS to harness to be triply sure.

Risk management for construction

Checking for risks before you begin work helps reduce your risks of chancing upon hidden environmental risks. 

Part of a comprehensive risk management strategy is to consider insurance to manage certain construction risks. 

What’s useful about construction insurance is that it covers your project while under, during, and to a limited extent, post construction. It will help protect your project for:

• Material damage, such as unexpected materials loss or workmanship issues that you have to fix as per the contract
• Physical damage or loss, including to equipment and plant on site
• Liabilities extending to third-party property/bodily injury and worker-to-worker injury.

We can guide you through a consistent risk management framework. That involves us discussing the outline of your activity, seeing what’s involved with each step and attaching risks to those, which we’ll then rank. That framework will help you address each risk through mitigation measures, controls or, where possible elimination. This is a good starting point for that discussion – the Victorian EPA’s guide for civil construction, building and demolition.

As a commercial property owner, it is important to understand your responsibilities and ensure that you have the right insurance coverage to protect your property against potential damages.

Unoccupied buildings

During the pandemic, commercial buildings were often unoccupied temporarily or indefinitely. That can still happen today with the soft tenancy market in some parts of the country. 

Nationally, the office vacancy rate is 14.3% as of April, while office values continue to fall. Meanwhile, BIS Oxford Economics has forecast a 13% vacancy rate for commercial property overall by the end of this year.

Even if you ‘mothball’ your unoccupied building, you’ll still need to manage the risks, including:

• Liability for visitors or trespassers who suffer injury or damage
• Fire safety, and
• Security to thwart malicious damage, such as graffiti as well as theft of materials/equipment, even copper cable theft
• Rubbish dumping, including asbestos

Protecting your unoccupied building means managing the risks to your asset’s value. Consider investing in solar-powered security lighting and smart security systems if the premises are unoccupied for a long period.

Insurers regard an unoccupied building as separate from one that’s vacant. To clarify, a vacant building has nothing in it – no people, property or personal items. 

However, commercial property insurance usually has specific limits on how long premises can be unoccupied before the cover is voided. Usually, it can be unoccupied for 90 to 120 days. 

Environmental & climate risks

More extreme weather may impact your commercial premises, depending on its location. 

Protect your premises against the key environmental and climate risks:

• Floods: Elevate stock and electrical transformers or panels if they’re usually on the ground floor; investigate installing flood gates and barriers
• Bushfires: Keep vegetation clear from your building; install external sprinklers and have a bushfire plan
• Windstorms: Check roofing is installed with roof screws and fastener places, and for an expected severe storm, cover windows and doors with thick plywood
• Hailstorms: These will most likely damage vehicles, outdoor signage, skylights and roof-mounted equipment

Business Queensland has a guide to help small-to-medium-sized businesses prepare for climate-related risks. Here’s an insight into their strategy, and a link to identifying and managing business risks.

Protecting your business property against electricity/fire

An electrical fire can start on your commercial premises due to:

• Faulty appliances
• Overloaded power boards and sockets
• Issues with light fittings
• Faulty wiring and fuse box
• Stock stored near electrical equipment
• Overheated equipment

As well, cooking equipment, human error, boilers, water heaters and furnaces present fire risks.

Commercial property owners and property managers are responsible for making sure their buildings comply with relevant fire safety regulations, such as the Australian building codes. However, your leasing agreement might stipulate a tenant has specific responsibilities for maintaining fire safety gear.

Depending on your agreement, ensure the fire management system is maintained, tested and updated, including smoke detector batteries. Organise regular fire drills, staff training and adequate fire-fighting equipment on hand, such as appropriate extinguishers and fire blankets.

Your responsibility as a commercial property owner

Typically, you’ll need to take care of:

• The building, including public and common areas
• Shared services and equipment that your tenants use
• Maintaining the buildings’ operational, such as ventilation, fire-safety systems, etc. that support tenants

While your leasing agreement may have delegated some responsibilities to tenants, you still have oversight. For example, tenants’ modifications or changes such as erecting signage, using a stairwell for storage, locking a fire escape, or reconfiguring the space could render your building non-compliant. Even furniture placed near balconies or balustrades is a risk. 

Ensure they discuss any alterations to the building and, where needed, check with a certified practitioner. You may wish to be explicit in the lease to prohibit sub-letting and specific activities, such as illegal businesses. 

What commercial property insurance covers

A standard commercial property insurance policy protects your business from damage to the building structure, its utilities and services, and structural improvements you’ve made. That cover could extend to portable buildings and shipping containers usually housed on the site and their contents. 

 It typically covers:

• Fire
• Lightning
• Explosions
• Storm damage
• Burst of leaking pipes
• Accidental or malicious damage
• Earthquakes or tsunamis
• Industrial accidents

Whether you have an unoccupied business or fully operational, we can negotiate on your behalf with the insurer about how that change affects your premium and coverage. 

Franchising can be a great way to start a business with a ready-made model and resources for a fee. Research shows that four out of 10 franchisees used to work for the franchisor, making it a natural transition. 

Franchising is a mature sector in Australia, so franchisors are becoming creative in finding ways to expand. Even part-time franchising is an option. Franchising is common in the fast-food sector, with 90% of businesses operating on a franchise model.

However, it’s important to weigh the benefits and drawbacks before making the move, as this article explains.

The advantages of running a franchise

Buying into a franchisee business usually means you’ll be able to:

• Tap into a business model that’s proven with work processes, a ready reputation and brand
• Access economies of scale when buying supplies
• Link to a pool of resources to fund advertising and promotion
• Be trained in how to run the business – often part of the deal with your franchisor
• Secure finance more easily, as it may be less than if you set up a business from scratch.

However, while these are attractive to the would-be franchisee, it’s important to understand the downsides.

The risks of taking on a franchise

Over the years, franchisees have faced risks such as:

• Not doing their due diligence before signing a contract
• Feeling obliged to sign unfair contract terms leading to exploitation
• High set-up fees depending on the business location
• Having to compete with other franchisees in the same region for customers and clients
• Opting for franchisor-assisted lending rather than securing funding elsewhere
• Having ongoing fees for franchise renewal, promotion, transfer, employee and management training, etc.
• Being limited in how the business will run, including the use of logos, store design, staff uniforms, even quality of food sold, which may constitute restraint of trade
• No guarantee the franchisor won’t become insolvent, renew the agreement at the term’s end, or allow you the option to resell the business.

Traditionally, the franchising sector also has a low female participation rate.

Some of the above risks were detailed in a Federal Parliamentary inquiry into the fairness of franchising released. Since then, the Australian Competition & Consumer Commission (ACCC) has updated its code of conduct for franchisees and franchisors. 

Importantly, the code states that franchisors should not give franchisees misleading or deceptive information. That’s why it’s a good idea to check what franchisors have disclosed about their operations on the Franchise Disclosure Register.

The ACCC also runs a free course to help would-be franchisees decide if franchising is a good fit. Check out this guide to Australian franchise laws and regulations. One law under question is whether franchisors are liable for their franchisees’ contraventions, such as underpaying workers. The Fair Work Ombudsman’s test case is ongoing. 

Insurance requirements

You can protect your investment as a franchise with solid risk management, including a tailored package of relevant policies. These are some of the specific risks you’d want to include in these policies:

• Business interruption
• Public/products liability
• Breakage of internal and external glass
• Deterioration of stock
• Burglary and theft
• Machinery or equipment breakdown
• Money cover whether at home, on your business premises, or to and from the bank
• Fire and perils, which cover you for stock, fixtures and fittings, plant and machinery.

As well, depending on your agreement and operations, ensure you look to cover:

• Staff (workers’ compensation)
• Professional indemnity 
• Management liability
• Transit risk
• Intellectual property and legal expense
• Product recall and contamination
• Cyber security risk.

Whether you own or are looking to purchase a franchise, speak with us to understand your insurance obligations and risks.

Mining has been one of Australia’s most profitable industries in 2022-23. Iron ore and coal mining, oil and gas extraction collectively account for $170 billion in total profits, notching three of the top 10 positions in the national list. 

But managing the risks involving people is one of the key concerns for businesses in this sector. Safe Work Australia says the industry has significantly improved workplace health and safety over the past decade, but there’s still more to do.

The most recent figures available show the mining sector directly employed 189,000 people at the end of June 2021, says the Australian Bureau of Statistics. And Western Australia accounts for 144,029 of that, a tripling of its mining workforce since 1997-98. According to IBISWorld, Australia has almost 9,000 businesses involved in mining, which currently employ about 200,000.

WA introduced tough workplace laws last year as part of regulators’ national trend to become more proactive about risk management. They include a maximum fine of up to $5 million and up to 20 years prison for companies responsible for industrial manslaughter. 

Add to that, the push for mining to be a critical part of our nation hitting net-zero carbon emissions by 2050. Australian banks are also looking to shift their exposure to mining and other industries affected by climate risk.

Understanding Mining Risks in Australia

As well as the risks above, Safe Work Australia and other sources list these risks for mining businesses:

• Body stressing, such as through manual handling and musculoskeletal disorders
• Slips, trips and falls
• Being hit by machinery or moving objects
• Working with high-risk plant
• Sexual harassment
• The possibility of more mergers and acquisitions.

A Queensland study into fatigue management in that state’s mining industry found one in 40 reported notifiable incidents involved fatigue, but that this was only the tip of the iceberg. The highest risk was with heavy vehicle drivers on surface mines. The report recommended employers use more fatigue-detection technology, and consider mental health outcomes when looking to reduce their fatigue risks.

However, technology can lead to other risks, such as cyber attacks. Mining operations are increasingly connected to cloud-based systems and the internet, says law firm MinterEllison. It advises integrating your cyber risk management into your overall risk management framework.

Strategies to Manage Risks in Mining

In NSW, the Resources Regulator updated its mining workplace safety regulation last September. It spells out that the person controlling a mine site must employ these risk management strategies:

• Comply with workplace health and safety laws
• Identify reasonably foreseeable hazards that could lead to health and safety risks
• Ensure that a competent person assesses the risks
• Eliminates those risks as reasonably practicable
• If risks can’t be eliminated, minimise them by using the hierarchy of control measures, such as this template offers 
• Maintain control measures
• Review those measures.

A WA government report addressing sexual harassment in the fly-in-fly-out industry recommends mining businesses improve safety measures, such as lighting, locks, CCTV and public-area layouts in accommodation. The Enough is Enough report also called for experts to run accredited training for staff as well as extra instruction for those who formally respond to reports of sexual harassment. 

Whether or not those issues arise in your workplace, it makes sense to focus on building and maintaining strong work culture. Ensure your business has appropriate policies and procedures to embrace diversity and inclusion. Monitor your longer-term risks by seeking expert advice for your strategic planning.

Is your small business among the one in four that say they’ll go under if faced with a liability claim? That’s the alarming statistic from one insurer’s survey. 

More respondents said they would:

• Lose clients
• Expect less revenue
• Have cash flow woes.

At the crux is understanding the cost of and whether you would be able to fund the costs of legal action due to injury or loss of damage to third parties arising from your business operations. If not, it’s time to look into insurance.

What does underinsurance mean to business?

Small businesses may find themselves in a tight spot when it comes to ensuring coverage for an event (fire, flood etc) that causes damage or business interruption to the business.

Having inadequate cover to protect your operations could put you out of business. Underinsurance, or having the incorrect cover, relies on you having funds to address shortfalls in the event of an adverse event or claim. If you don’t have the cash flow, capital or retained profits to do so, that could seriously interrupt your operations.

A key example

It’s vital to know the difference between the ‘insured amount or limit of liability’ and ‘total declared value’ of an insured asset. 

For instance, you may have insured your building premises for $1.5M, but need $2M to replace it totally. Insurers understand construction prices can vary, so add a 15%-to-20% margin to your policy. Even with that, you’re only insured for up to $1.7M. Insurers won’t look at that figure, but they will see you’re insured for a percentage of your property’s value.

Why people commonly underinsure

It’s easy to underestimate the costs to fix, rebuild, or replace your contents or property, including:

• Guessing their value 
• Using an old cost-per-square-metre figure for your building replacement cost
• Forgetting to factor in renovations and upgrades
• Higher building materials and labour costs
• More stringent building codes, such as for rebuilding on challenging sites
• Extra fees, including for removing asbestos, demolition, experts, etc
• Temporary accommodation costs, if needed
• Neglecting to list garages, sheds, car parks or other structures on your policy.

Another issue is that some business owners don’t think the worst-case scenario could happen to them. Tap into your network to ask other operators about their experiences with underinsurance and how they dealt with it.

Steps to avoid underinsurance

Using a quantity surveyor is a good start, but the key is conducting regular reviews of your coverage. This can help us point out any underinsurance risks. Policy fine print can change over time, meaning gaps in your coverage could emerge. Be clear on the distinction between accidental damage and defined events, too.

You may have changed your business operations, services/products, assets or premises, so need to reflect that in your coverage. Here are other reasons that would typically trigger a tweak:

• Stock levels differ from those on your policy lists
• Recruited more staff or let some go
• Significant changes to your turnover (either positive or negative)
• Created new business entities
• Changed directors or ownership structures
• New risks, such as cybersecurity, due to working in different environments (staff working remotely, for example).

Identify risks to your business and actively work to minimise their effects on your operations. Developing a robust business continuity plan will give you insights into how risks could affect your business and what to do to overcome interruptions.

Consider your business insurance policy package as something that adapts and grows with your business. We can help ensure you’re taking a comprehensive approach. Speak to us to ensure your assets are fully covered.

Australian farmers are on tenterhooks with a 50% chance of an El Niño dry weather pattern arriving later this year. According to April’s update from the Bureau of Meteorology, that’s double the normal likelihood.

El Niño alert

Some climate models forecast the pattern could develop into a ‘super El Niño’. That would mean very high temperatures around the equator centring on the Pacific Ocean. 

The last time this weather pattern happened was in 2015-2016, resulting in record-beating high temperatures globally. It was Australia’s fourth-warmest year, but the hottest decade. El Niño can mean drought, and an early start to the fire season, but not always, says the bureau. It’s quite variable, and there are two distinct types of El Niño weather patterns. 

Research shows a typical El Niño delivers large-scale climate variability. This accelerates crop loss, thereby posing a severe risk to global food security. 

A UN report on the lessons learnt from the last El Niño recommends agricultural risk management approaches, including:

• Switching to drought-resistant crops
• Using natural resources more efficiently
• Creating and rolling out disaster prevention plans
• Building community capacity to adapt to climate-related hazards.

This article delves into more detail about what Australian farmers can do to prepare.

Shift away from water-intensive crops

If the forecast predicts less rain, can you shift from thirsty crops, such as rice or cotton, to those which deliver more per unit of water? Check with your local agronomist for suitable crops bred to survive harsher conditions in your climatic region.

Consider changing your farming to zero or minimum tillage operations, ensuring minimal disruption to your soils. Avoid ploughing, instead space the holes to where seeds will go, and mulch to control weeds.

Install drip irrigation

Drip irrigation is more efficient than sprinklers, which have a higher water evaporation rate. The Australian Farmers’ Database indicates in our country’s drier farming regions, drip irrigation scores 90% or higher efficiency. Meanwhile, sprinklers rate about 80% to 85% and flood and furrow, only up to 70%.

Drip irrigation also cuts the risks of disease, soil erosion and fertiliser leaching. The downsides are the initial installation cost, and you’ll need to occasionally filter the water to reduce clogging. Rodents may also damage the pipes and tubes.

Caring for livestock

During extreme heat, be sure to have these measures in place to protect your animals:

• Plentiful and accessible water supply
• Appropriate refuges from the heat, including shelterbelts, stands of trees, and constructed shelters, which don’t result in stock overcrowding
• Avoid handling animals in extreme heat, or if you must, schedule it for early morning or late in the day. (Milking stock will produce up to 1.5L more a day if you delay milking by an hour in the evenings)
• If you have to transport stock, take a planned route that identifies rest stops with shade and water for them
• Know which type of animals have a higher risk of heat stress, such as animals that are young, dark-coloured, have been ill or had respiratory disease
• Look out for heat stress in animals and be on hand to manage it.

Agriculture Victoria offers detailed advice on managing heat stress for animal types. 

Revisit your risk management

There are plenty of evidence-based strategies Australian farmers can use to better prepare for what a possible El Niño might deliver. But, be mindful of what a highly cited research paper says: around the globe, there’s no likely or actual consensus on classifying or measuring ‘readiness’ for El Niño. The approach over the years has been more reactive than strategic.

Be sure to check your insurance coverage with us as part of your risk management approach.

Professional liability insurance – also known as professional indemnity cover – may not be compulsory for your sector. But it could be an investment in risk management worth considering. 

This cover offers protection against legal costs for businesses that give advice or services for a fee. Typically, accountants, architects, IT specialists, marketing consultants, lawyers, bankers, builders, financial and business advisers, doctors and many other professionals who contract their services would have this insurance.

It’s important to know that general liability cover would not protect your business from claims because of negligence, mistakes, misrepresentation or, for medical and healthcare professionals, malpractice. That’s where professional liability insurance comes in to bridge the gap. This article covers a range of scenarios where you may need such cover.

What happens when you give the wrong advice?

Mistakes, whether honest or careless, could lead to a business giving incorrect advice to its clients. Minor errors might be easily fixed, but others could have serious consequences for the businesses of the client and the professional services firm.

For example, if one of your clients takes your negligent or incorrect advice and directly suffers a financial loss, they could sue for professional negligence. Such a case is a test of your ‘duty of care’ to that client. Your duty of care is a legal responsibility to ensure your business carries out its services responsibly, adequately and safely to prevent harm or damage. 

When could a professional negligence claim arise?

These scenarios could trigger a professional negligence claim against your business regarding your professional services:

• Mistakes, errors, or sub-standard work that led to harm
• Inaccurate course of actions or evaluations
• Unqualified advice that your employees give despite them lacking the experience and qualifications 
• Omissions, i.e. not acting when you were reasonably expected to do so
• The wrong treatment
• In the case of an architect-as-project manager, for instance, when their subcontracted geotechnical engineer designs faulty building footings that fail

If a client’s legal claim against your services or advice is successful, and you don’t have insurance, you could face significant financial hardship. Your personal assets and possibly your home might be at risk, such as if a court awards hefty legal costs against you.

Assessments before deciding on a policy

Conduct a risk assessment of your business to understand your professional liabilities. Factor in your business size, complexity, scale and the financial resources you can call on if a client claims against you. Your state or territory government might recommend professional indemnity insurance based on your business type.

To work out your potential liability, estimate:

• Worst loss scenario per client
• Total possible number of claims a single client could lodge
• How many claims you could expect during your policy period

Your industry may have compulsory minimum requirements for policy wording and standards of cover. If you contract to a larger business or government agency, it may stipulate coverage limits, too. Here’s an example of the Victorian Government’s requirements for architects working in that state.

What PI should cover?

Next, consider how well a policy matches your needs by looking at:

• Who’s providing the cover? Are they suitable
• Minimum sum insured
• Whether or not the sum insured excludes defence costs, official investigations and inquiries
• Excess
• If the policy will cover you for claims about your past work
• Cover for all work and everyone affiliated with your practice, or are limits imposed
• Protection against defamation, document loss, fraud, dishonesty, breaches of confidentiality or copyright, not meeting a contractual requirement
• Minimum length of coverage before you can opt for run-off cover 

Most professional indemnity policies don’t cover property damage and bodily injury claims.

How to be confident you’re covered

Unfortunately, you could offer exemplary service, but you have no control over an unhappy client claiming against you, even if there’s no merit to their issue. Even if your business does not contest a claim in court, the public could see that as admitting guilt. Expect your business reputation to suffer.

Discuss your best-fit policy options with us. We can help spot any gaps in coverage and find a tailored policy to suit your unique business and its risks. We can also help you regularly review the cover, particularly if any circumstances have changed.