Australian small businesses are still feeling the strain from rising insurance costs, with QBE pointing to factors beyond the insurance sector.
In a submission to the parliamentary inquiry into small business insurance, the insurer argued that premium pressure is coming from several directions at once: more severe weather events, higher claims costs, sector-specific risks, taxes on insurance, and regulation. It said those pressures are hitting some businesses harder than others, especially operators in higher-risk industries or regions and those trying to secure public liability or professional indemnity cover.
Rather than treating the issue as a simple pricing problem, QBE framed it as part of a wider business environment that has become harder for smaller operators to navigate. In its submission, it notes that small businesses make up almost 98% of Australian businesses, employ more than five million people, and contribute $596 billion in value-added output. However, conditions remain subdued, with cost pressures, margin pressure, labour shortages, and stronger competition continuing to weigh on the sector.
A major part of QBE’s argument is that the underlying risks facing businesses have changed. It pointed to the growing cost of natural disasters and said long-term investment in resilience, mitigation, land-use planning, and stronger building standards would help reduce exposure over time. It also backed broader measures such as flood defence infrastructure for vulnerable homes, properties, and communities.
Some parts of the market are under heavier strain because the cost of claims has risen sharply. For public liability and professional indemnity cover, QBE said premiums have been pushed up by rising legal and litigation expenses, higher medical costs, longer claim durations, and more psychological injury claims. It argued that civil liability settings, especially those linked to personal injury claims, should be reviewed, and that insurance requirements in government contracts should be checked to see whether they are proportionate to the work involved.
Many small businesses may also not be updating their cover as their risks change. QBE data shows that as at June 30, 2025, 11% of businesses had increased their building value by more than 10%, 7% had increased their stock or contents cover by more than 10%, and 80% had not changed their business interruption sums insured. In a period of rising costs and shifting risks, that can leave businesses underinsured.
That matters because many smaller operators do not have much room to absorb a financial shock. Small businesses are often exposed to financial, operational, environmental, and legal risks, but may have limited buffers if something goes wrong.
Cyber risk is another area QBE said is being overlooked. Take-up of cyber insurance among small businesses remains low and argues that better education, stronger cyber resilience, and more appropriate sharing of government-held cyber risk information with insurers could help businesses prepare better.
It also repeated a longstanding industry complaint about taxes on insurance. QBE said levies, duties, and charges make cover less affordable and reduce take-up, adding to the broader problem of non-insurance and underinsurance. In the submission, it said: “The most effective and immediate way to reduce insurance premiums is to remove duties, levies and charges on insurance products.”
