Australian Businesses Demand National Action on Rising Insurance Costs

The report outlines several key recommendations aimed at reducing insurance costs and improving accessibility for businesses:

• Abolition of Taxes on Insurance Policies: Eliminating taxes on insurance premiums to reduce the overall cost burden on businesses.
• Productivity Commission Review: Initiating a review of small business insurance costs to identify and address systemic issues.
• Establishment of a National Support Body: Creating a dedicated body to provide guidance and support to small businesses in managing insurance and risk.
• Development of Tailored Insurance Products: Collaborating with insurers to design products that meet the specific needs of SMEs.
• Reform of Civil Liability Laws: Updating outdated laws to reflect current business environments and reduce legal complexities.

ACCI CEO Andrew McKellar emphasised the critical nature of insurance as a safety net for small businesses, stating that insurance should be an essential safety net for small businesses, not an unmanageable burden. He highlighted that many businesses report premium hikes of 30% or more within a year, with some struggling to navigate inconsistent requirements across jurisdictions.

The report warns that the trend of businesses opting to go without insurance or reducing coverage to manage costs carries significant long-term risks. In the event of a disaster, underinsurance can leave businesses without the necessary funds to recover, potentially leading to insolvency. This underscores the necessity for strategies that ensure small businesses can afford adequate coverage.

Furthermore, the report suggests that the upcoming review of the cyclone reinsurance pool presents an opportunity to evolve the scheme in a way that enhances affordability for small businesses in high-risk regions.

The ACCI and ICA's joint report serves as a call to action for governments at all levels to collaborate on a reform agenda that addresses taxation, regulation, procurement, and education. Such coordinated efforts are essential to support business continuity, reduce economic risk, and help small businesses better manage their exposure to insurance costs.