Tax relief, risk education and resilience investment would all help ease cost pressures on small businesses, the Insurance Council of Australia (ICA) argues in submissions to the Parliamentary Joint Committee’s inquiry into small business insurance.
According to the ICA, Australia’s 2.5 million small businesses are facing rising insurance premiums due to extreme weather, inflation and regulatory complexity.
Since 2020, extreme weather has generated more than $4.5 billion in insurance claims, while construction costs have surged 40 per cent, the organisation said.
The rapid adoption of digital technologies, while creating new growth opportunities, has introduced new risks such as AI-driven attacks.
In addition, state-based taxes and levies have added nine to 40 per cent to premiums. In 2024-25, state governments collected $8.9 billion in insurance taxes, exceeding the industry’s total profits by $1.6 billion.
In its submissions, the ICA proposed several reforms to mitigate such pressures, including providing SMEs with government-funded risk education to help reduce their exposure, given that rising construction costs are increasing the risk of underinsurance.
The council also suggested that the governments invest in mental health prevention, address workforce shortages, and harmonise rules across jurisdictions, citing mounting pressure from psychological injury claims.
In addition, the government is urged to build on programs such as Cyber Wardens and to share data from the mandatory ransomware reporting framework with insurers to strengthen collective defences. The council noted that cyber insurance take-up among SMEs remains low despite rising threats.
The ICA also plans to lodge further submissions covering public liability and professional indemnity insurance.
“These submissions set out a roadmap for practical reforms, from tax relief to better risk education, that can ease costs on small businesses without compromising protections,” said ICA CEO Andrew Hall.
“Whether it’s the rising cost of extreme weather, the growing challenge of psychological injuries in the workplace, or the evolving threat of cybercrime, these are complex pressures that require government, industry and small business to work together.”
