A recent Australian Chamber of Commerce and Industry (ACCI) report shows that an increasing number of small businesses are underinsuring or forgoing insurance completely due to the rising expense of premiums.
The report, created in conjunction with the Insurance Council of Australia, showed that for Australia’s 2.5 million small businesses, insurance premiums, along with other cost pressures such as wages, rent and the increasing cost of goods, have become a critical issue.
Owners of Ballarat’s Hotel Canberra, Pete Dillon and Jigs Liwanag have held the business for three and a half years, and say that in this time, their premiums have increased by around 20 per cent.
This is supported by Michael Gottlieb, chief executive officer of BizCover, whose data shows that one in three businesses have endured premium hikes of more than 30 per cent over the past two years.
Businesses are under immense pressure to trim expenses, including pubs, factor in fixed costs, which can absorb over a quarter of monthly revenue before the doors even open.
Dillon estimates Hotel Canberra pays around $4k a month in insurance costs alone.
“We’ve got to cover public liability, workers’ compensation insurance, plus a series of other insurances in the business.
“Then, as tenants, we also pay the owner’s building insurance,” he told Yahoo Finance.
The ACCI report found the cost of insurances was rising across all jurisdictions, due to extreme weather events, inflationary pressures, global reinsurance trends and increasing legal liabilities.
On top of this, states and territories may also add taxes, duties and levies to premiums, further inflating costs by between nine and 30 per cent.
To address these issues, ACCI CEO Andrew McKellar encourages small businesses to engage a broker and to undertake a risk audit, to ensure they are not over- or under-insuring and to reduce their level of risk.
“Small business owners should evaluate and take steps to mitigate their risk exposure to threats such as cyber-attacks, workplace hazards and physical security,” McKellar says.
The report also had several other recommendations for both small businesses and government, such as being diligent in comparing policies, and for governments to abolish duties, levies and taxes.
Dillon said that his business was also looking to change its model to become more sustainable in the future.
“We have to change to survive or adapt to survive. It’s one of the things that we are looking at again in 2026, what else can we do to keep us relevant?” he said.
