Rising insurance costs hitting NSW businesses hard, new report reveals

Many small and medium-sized businesses are struggling to keep up with ever-increasing insurance premiums. 

A landmark Business NSW report, “Insurance at the Speed of Business”, has revealed enterprises are being forced to close because of crippling public liability and public indemnity insurance. 

Business NSW identified 63% of tourism businesses, 48% of hospitality businesses and 33% of transport businesses as uninsured or underinsured for public liability. 

For professional indemnity, we observe 42% of construction businesses and 39% of professional services businesses being uninsured or underinsured. 

“The ripple effect of uninsured and underinsured businesses on the wider economy needs to be addressed urgently,” Business NSW CEO Daniel Hunter said. 

“Uninsured businesses don’t want to be forced into a high-stakes gamble on their future, but they have no choice.” 

Insurance premiums in some areas are soaring by 30% per year. 

“Uninsured businesses are vulnerable, and their closure may result in bankruptcy, layoffs, legal problems and disrupted services - impacting both business owners and their customers,” Mr Hunter said. 

“Insurance has been the leading cost concern for businesses in 10 of the past 12 Business Conditions Surveys since December 2019. These concerns trump taxes, energy and wages.” 

Business NSW proposes a set of actions aimed at addressing the insurance problem at the speed of business: 

• New product offerings that can offer faster payouts and clearer claims processes; 

• Discretionary mutual funds and parametric insurance (insurance paid out on the magnitude of the event rather than the magnitude of the loss); 

• Lower taxes on insurance in NSW; 

• A voice for small business in national insurance reform processes; 

• Improvements to government procurement to reduce and remove unnecessary insurance requirements; 

• Improved education for small businesses about the insurance market; and 

• Nurturing a culture of insurance innovation to meet the challenges of the rest of this century.