Small business owners slugged with high insurance fees

If you’ve noticed your business insurance costs climbing faster than the price of your morning latte, you’re not imagining things. A report from the Australian Chamber of Commerce and Industry (ACCI) has revealed small businesses are paying as much as 30 per cent more for their premiums, thanks largely to taxes and levies slapped on by state and territory governments.

Insurance pain hitting business owners poickets

The report, Addressing the Small Business Insurance Challenge, put together with the Insurance Council of Australia paints a grim picture. It shows a growing number of small business owners are either cutting back their cover or dropping their insurance altogether because it’s getting too pricey.

With energy bills, rent, and wages all on the rise, insurance is fast becoming another cost many small business owners can’t afford to carry.

ACCI chief executive Andrew McKellar says that’s a real worry.

“We’re seeing small businesses underinsuring or going without cover altogether, which leaves them incredibly vulnerable if something goes wrong,” he said.

How to stay covered at a lesser cost

McKellar says there are still ways to stay protected without breaking the bank.

“One of the top priorities for small businesses when it comes to insurance is to engage an insurance broker,” he said. “A broker can help you identify the right policies and make sure you’re not over-insuring or under-insuring.”

He also suggests business owners do a proper risk audit to see where they might reduce exposure to threats like cyber-attacks, workplace hazards and theft.

“Taking steps to mitigate your risk can make you a safer bet for insurers and, in some cases, help bring your premiums down,” McKellar said.

Calls for governments to pull their weight

Beyond what business owners can do, ACCI says state and territory governments need to step up. The chamber is urging the abolition of what it calls “unproductive taxes” such as stamp duty and emergency service levies, which can add up to 30 per cent to the cost of premiums.

“Some states have already abolished these taxes and levies,” McKellar said. “It’s time the rest followed suit.”

The report also recommends a Productivity Commission review into small business insurance costs, updating civil liability laws to make public liability cover more accessible, and setting up a government-backed body to help small businesses boost their insurance literacy.

The insurance industry backs reform

Insurance Council of Australia boss Andrew Hall agrees there’s an urgent need for change.

“We know that insurance provides an important safety net for small businesses to operate and offer services to their community,” he said. “This report sets out practical actions that all levels of government can take to support small businesses by improving insurance affordability.”

Hall says reforming outdated state laws and cutting taxes would be a solid start.

“State and territory governments have a critical role to play when it comes to making insurance more affordable,” he said.

Rising costs bite businesses

For small business owners like Yasmin Coe, who runs artisan chocolate shop Sweet Pea and Poppy in regional NSW, the insurance pinch is a real threat to business.

“Rising premiums are increasingly difficult to absorb in an already tough economic environment,” she said. “Adequate insurance across property, equipment, public liability and workers compensation is crucial for my small business, providing confidence and certainty.”

Coe, who also sits on the board of Destination Southern NSW, says she fully supports the report’s push for better access to insurance for small business owners.

Coe believes that without government action, many small businesses may soon find staying insured a luxury.

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