Financial Stability: TPD Insurance offers a financial safety net, allowing you to focus on your recovery without worrying about how to cover your expenses. It ensures that you can continue to support your family and maintain your standard of living even when you can’t work.

Business Continuity: For business owners, TPD Insurance can be crucial in keeping the business running smoothly. The lump sum payment can help cover business debts, hire additional staff, or fund operational costs during the transition period.

Debt Repayment: If you have significant personal or business debts, TPD Insurance can help ensure that these are paid off, preventing your family from facing financial hardship.

Life insurance is a policy that pays out a sum of money to your nominated beneficiaries upon your death. This payout can help cover various expenses such as mortgage repayments, living costs, educational expenses for children, and any other financial obligations. For business owners, life insurance is particularly important because it can also help protect the business itself by ensuring that debts are covered and that there is financial support for succession planning.

• Life Insurance: Financial security for families in the event of unforeseen circumstances.
• Total Permanent Disability (TPD) Insurance: Support for individuals who are unable to work due to permanent disability.
• Income Protection: Continuation of income stream during periods of illness or injury, allowing individuals to maintain their standard of living.
• Employee Benefits: Attractive packages that help SMEs attract and retain top talent by ensuring their staff’s well-being.

These personalised Insurance Solutions are aimed at addressing the complex needs of high-performing enterprises that prioritise the health and security of their workforce.

Starting 22 May HDL Employee Benefits t/as HDL Life will roll out a series of fortnightly newsletters, each highlighting a different aspect of these vital coverages. The series will equip business owners and their employees with the knowledge to understand and leverage their new Personal Insurance Protections effectively.

“We are excited to offer these new services and look forward to supporting our clients in safeguarding their most valuable asset — their people,” added Gavan Duffy – Group Managing Director HDL Insurance Brokers Pty Ltd.

Duffy says there are several factors to consider.

“The first thing is that in business insurance there is generally a co-insurance clause that states you have to insure for the replacement cost of the building as at the time you take out the policy,” he says.

“That’s relevant in the current inflationary environment because, unfortunately, the cost of materials and building costs have increased significantly.”

It’s extremely important that the sum insured reflects the true replacement cost at the time the policy is taken out, regardless of what the owner believes it to be, Duffy says.

“If the business doesn’t insure for full replacement cost, in the event of a claim, the insurer can reduce the amount of the payout even if there is not a total loss” he says.

The way in which this works is complex and depends on the wording of the particular policy.

However, the following is an example from a wording which is widely used in the market.

• Sum Insured on the building: $1,000,000.
• Actual cost of replacement of the building: $2,000,000.
• Cost of repairs: $200,000.
• Amount payable under the policy = ($2,000,000 x 80%) = $1,600,000.
• $1,000,000/$1,600,000 = 62.5%.
• $200,000 x 62.5% = $125,000
• Amount payable = $125,000.

However, Duffy says: “If the building burns down, the insurer only has to pay you the sum insured. If the insured amount is $1 million and it’s going to cost $2 million to replace, you’re $1 million out of pocket.

The maximum criminal penalty for not having a director ID when required, or failure to apply for one when directed by the Registrar, is $13,200, with civil penalties extending up to $1.1 million.

Gavan Duffy, Managing Director HDL Insurance Brokers, says in the event a director receives a civil penalty, liability insurance may cover its cost.

“But insurance won’t cover criminal penalties.”

1. Cyber Incidents

Accelerated digitisation of supply chains and growing reliance on digital infrastructure has seen an increase in cyberattacks in the last few years. Cybercrime incidents are now estimated to cost the global economy more than $1trn a year.

According to the report, over a third of all respondents indicated cyber as their biggest concern for the coming year, with risks including IT outages, ransomware attacks and data breaches among what businesses feared most.

Investing in cybersecurity measures and raising protection levels is the best way for businesses to protect themselves against cybercrime. Regular patching, cyber awareness training for staff, secure backups and cyber insurance are also effective in helping minimise disruption and loss from a cyber incident.

2. Business Interruption

High energy costs have led to temporary production cuts in energy-intensive industries, causing supply chain disruptions across critical sectors such as food, agriculture, chemical, pharmaceuticals, construction, and manufacturing.

The conflict in Ukraine has also added further pressure to already strained supply chains. Financial market volatility is expected to persist in 2023 due to high inflation and the energy crisis in Europe, resulting in a cost-of-living crisis and the threat of recession, causing uncertainty for businesses.

Taking proactive steps such as improving business continuity management, diversifying supply chains, intensifying supplier selection, and investing in technological infrastructure to support remote work can help businesses remain operational during an interruption.

3. Macroeconomic Developments

Macroeconomic Developments has jumped to a top three risk ranking for the first time since 2012. High inflation, together with the energy crisis, trade tensions and the ongoing impacts of the pandemic, have resulted in the cost of living soaring and the threat of a recession.

Despite three major economies – US, China, and Europe – facing an economic crisis, Australia has had a comparatively strong rebound post-pandemic. We are, however, experiencing an inflation rate currently at its highest in over a decade, causing a significant increase in the cost of living for Australians.

4. Energy Crisis

Spiralling fuel costs, supply disruptions, inflation, and the effects of Russia’s invasion of Ukraine have seen Energy Crisis rank in the top 10 global risks for the first time.

As Europe’s energy demands rise due to the crisis, it could lead to a decrease in available energy resources and a subsequent price increase. As a result, Australian businesses could experience a knock-on effect on the cost of production and supply chain disruptions.

5. Changes in Legislation and Regulation

The rapidly changing regulatory environment, driven by increasing trade barriers, climate change policies, and rising geopolitical tensions, is placing significant pressure on businesses. These pressures include increased compliance costs, decreased competitiveness, and reputational damage due to non-compliance.

Businesses, particularly those in highly regulated industries such as finance, healthcare, and energy, need to ensure they have contingency plans to adapt to new regulations as they are implemented.

6. Natural Catastrophes

Despite Natural Catastrophes falling three positions from last year, extreme weather in 2022 showed single events continue to cause losses in the billions of dollars and are still a concern for businesses.

Hurricane Ian, which struck Florida in September, was the year’s costliest natural catastrophe event. Other notable events include widespread flooding across South Asia, record-breaking hailstorms in France and the devastating heatwaves suffered by Europe and China.

As mentioned earlier in this article, Australia places this risk factor at number one following a series of recent weather events including insured losses of around $4bn in the country’s costliest-ever natural catastrophe, the East Australian floods.

7. Climate Change

Climate change is still a key concern for businesses globally. Extreme weather events, such as floods, storms, and droughts, can pose a significant risk of property damage and business interruption. Businesses are also exposed to legal and liability risks due to regulatory frameworks, increasing disclosure requirements, new market conditions and product requirements.

Despite these challenges, many companies continue to take action to combat the direct impact of climate change by adopting carbon-reducing business models, developing dedicated risk management strategies for climate risks, and creating a contingency plan for climate change.

8. Shortage of Skilled Workforce

Even before Covid-19, the labour market was under pressure. Now with rising wage inflation, and an increase in early retirements, many countries are experiencing a reduction in the available workforce at a time of high demand for labour.

Report respondents have ranked talent shortages as a top 5 business risk in several sectors, including aviation, engineering, construction, and professional services. This shortage can significantly impact businesses, including reduced productivity, increased labour costs, and potential project delays.

9. Fire and Explosion

Fire remains a significant cause of business interruption (BI) and supply chain disruption. These incidents can prevent a business from reaching customers or resuming its daily operations for extended periods.

It is crucial for businesses to regularly assess and improve their fire prevention practices, including preventative measures, fire extinguishing methods and contingency plans to help lower the risk of loss from an incident.

10. Political Risks and Violence

2022 was another year of global instability, with rising conflict and civil unrest. The invasion of Ukraine by Russia intensified the risk landscape as well as unrest and protests in several countries, including Iran, Sri Lanka, the US, China and Europe.

This will likely continue in 2023, particularly in those countries with wide financial discrepancies and grievances around specific events and long-standing systemic injustice.