The Australian Consumers Insurance Lobby (ACIL) said small business and community-sector insurance markets are experiencing pressures across several key product lines, including professional indemnity, public liability, and cyber cover, as it lodged a submission to a federal inquiry into small business insurance. The submission was made to the Parliamentary Joint Committee on Corporations and Financial Services, which is examining whether current insurance products and regulatory settings are suitable for small businesses, not-for-profits, and community organisations in an environment of rising premiums and constrained capacity.
The federal committee, which launched its inquiry in late 2025, is assessing the accessibility, pricing, and regulation of insurance for smaller commercial and community entities. Its terms of reference include public liability, professional indemnity, cyber risk, and business interruption policies, along with the broader regulatory environment in which those products are offered. Sectors identified for closer review include construction, tourism, live entertainment, and other industries where stakeholders report that obtaining cover has become more difficult or more costly. Interested parties have been invited to provide written submissions by March 6, 2026, with public hearings and further engagement expected as the inquiry progresses.
ACIL – which usually focuses on domestic home, motor, and residential insurance – told the committee that conditions in small business insurance markets are affecting consumers, communities, and economic activity, saying it had become “acutely aware” of these impacts.
ACIL’s submission places particular emphasis on professional indemnity (PI) insurance written on a claims-made basis. The lobby group said that when insurers later withdraw from specific sectors or introduce broad exclusions, professionals can be left exposed for work done in the past despite having previously held cover. The group describes this as a “serious and systemic protection gap for building certifiers, engineers, and consultants and [one that] undermines confidence in professional standards and consumer protections.”
ACIL also reports that public liability markets “show signs of genuine market failure” in some segments, with insurers either exiting or offering premiums and deductibles that small enterprises may not be able to meet. Cyber insurance, described by ACIL as “an unavoidable necessity for modern small businesses,” is said to be subject to steep price rises, reduced limits, and tighter underwriting for many policyholders.
The submission draws parallels between small business insurance and conditions in personal lines in regional and remote Australia. According to ACIL, businesses exposed to cyclones, bushfires, and floods in these areas are facing limited insurer appetite and higher premiums. To illustrate the impact on insureds and communities, ACIL cites publicly reported cases where changes in insurer participation or coverage have coincided with business closures or reduced access to services. These include:
ACIL contends that these examples show insurance constraints extending beyond specialist sectors into leisure and tourism activities that, it said, depend on the continued availability of insurance cover.
In its comments on pricing and underwriting, ACIL expresses concern that some risks are being “priced out of existence” through current risk-selection practices. The group acknowledges that insurers have “legitimate commercial considerations,” but contends that “an insurance market cannot function – nor fulfil its societal purpose – if every individual policy must be underwritten at a profit.” ACIL added: “In circumstances of heightened risk, insurers must share responsibility for ensuring that essential cover remains available and affordable. When insurers retreat from entire classes of risk, the burden shifts unfairly onto small businesses and ultimately to consumers and communities that rely on those services.”
These concerns sit alongside market data previously highlighted by the Insurance Council of Australia (ICA) to a New South Wales parliamentary committee in May 2025. ICA reported that average public liability premiums for small businesses and not-for-profits had risen by about 55% to 60% since 2019, outpacing general inflation, with community groups, volunteer organisations, and outdoor leisure operators among those most affected.
ACIL does not endorse a single solution but points to potential collective mechanisms across the industry. One option it raises is for the ICA to “consider facilitating an industry-supported underwriting facility or joint-agency, co-insured by member companies, to maintain coverage in lines where market failure is evident.” The submission said: “Such a facility would not necessarily be profitable, but could operate as part of the broader social responsibility of the insurance industry.”
The group also calls for a regulatory framework that provides “adequate oversight of availability and affordability issues,” earlier identification of sectors at risk of insurer withdrawal, and mechanisms to enable industry-wide responses to systemic problems. ACIL supports stronger transparency obligations and improved data collection by regulators such as ASIC to provide earlier visibility of emerging stresses in particular lines or regions.
Although ACIL’s primary focus remains household insurance, it links small business insurance conditions to broader community and economic outcomes. It notes that when small enterprises, not-for-profits, and community organisations cannot obtain or maintain cover, there may be implications for economic participation, public safety, and access to services. ACIL said: “It is imperative that the insurance industry accepts part of the responsibility for maintaining accessible and affordable cover – particularly where the withdrawal of insurance threatens economic participation, public safety, or community wellbeing.”
