Insurance affordability has emerged as one of the most pressing challenges facing small businesses across Queensland and increasingly across Australia. A recent submission by Business Chamber Queensland to the Parliamentary Joint Committee on Corporations and Financial Services outlines why insurance products are not keeping pace with the realities small businesses face, and what can change. 

Insurance is now a top cost pressure 

For many small businesses, insurance premiums have overtaken other common cost pressures such as energy, wages and fuel. In Business Chamber Queensland’s latest pre-budget survey, reducing insurance costs ranked as the number one priority for businesses. 

More than 85.7 per cent of respondents said lower insurance costs would have a positive impact on their business and the broader economy. 

Premiums have risen sharply over recent years. While inflation peaked in 2022, insurance costs continued to climb well after other prices began to stabilise. Nationally, insurance prices rose by around 6 per cent in 2022, 16 per cent in 2023, almost 11 per cent in 2024 and a further 3 per cent in 2025. These increases followed major flood events, higher rebuilding costs and global insurance market pressures. 

For small businesses operating on narrow margins, these increases can be existential. 

Disproportionate impact on regional and high-risk areas 

The affordability challenge is most acute in disaster-prone regions. In Far North Queensland, North Queensland and Central Queensland, 89.2 per cent of businesses report insurance costs as a major concern. Many face premiums well above $5,000 per year, more than double the average cost for businesses located south of the Tropic of Capricorn. 

While initiatives like the cyclone reinsurance pool have begun to reduce average premiums in parts of North Queensland, underinsurance is widespread. Some businesses are forced to reduce coverage, accept higher excesses, or exit insurance altogether, leaving them exposed to disaster. 

Insurance Is essential to staying in business 

Adequate insurance is not optional for modern businesses. It is often a prerequisite for: 

• Participating in government and corporate supply chains 
• Securing finance or investment 
• Recovering from natural disasters or cyber incidents 
• Maintaining business continuity during crises 

When insurance becomes unaffordable or unavailable, businesses can be locked out of growth opportunities or pushed toward closure. 

Cyber insurance: A growing but unsettled market 

The submission places particular emphasis on cyber insurance, reflecting the rapidly changing risk environment for small businesses. 

More than one in ten Queensland businesses reported experiencing a direct cyberattack in 2024–25, with the average cost per incident exceeding $56,000. Despite this, awareness of cyber risks and mitigation options remains low, and many small businesses assume they are too small to be targeted. 

Cyber insurance premiums have surged in recent years, tripling between 2021 and 2022, while coverage terms remain inconsistent and complex. The market also faces structural challenges, including: 

• Limited reinsurance capacity 
• Uncertainty around catastrophic, systemic cyber risks 
• Rapidly evolving threats such as ransomware-as-a-service and AI-enabled attacks 

Clearer policy wording, greater standardisation, and stronger links between cyber maturity and premiums could help make cyber insurance more accessible and affordable. 

Prevention and resilience must be rewarded 

A consistent theme throughout the submission is that risk reduction is not being adequately reflected in premiums. 

Investment in flood mitigation, cyclone resilience, fire protection and cybersecurity can significantly reduce risk, but businesses often see little or no premium relief in return. This weakens the incentive to invest in resilience, even though prevention is far cheaper than recovery. 

The submission highlights successful examples such as Queensland’s Household Resilience Program, which offers grants for strengthening homes and can lead to lower insurance premiums. A similar approach for small businesses along with better recognition of public infrastructure upgrades could help stabilise insurance costs over time. 

Exploring new insurance models 

Looking ahead, the submission encourages consideration of alternative approaches, including: 

• Parametric or index-based insurance, triggered by weather or flood thresholds rather than loss assessments 
• Expanding public reinsurance to cover additional catastrophic risks, such as non-cyclone flooding 
• Better land-use planning to reduce exposure to high-risk areas 

With disaster recovery costs projected to at least double over the next 40 years, shifting focus from recovery to mitigation is both an economic and fiscal necessity. 

A call for coordinated reform 

The submission calls for a coordinated response involving governments, insurers, reinsurers, and industry bodies. Priorities include improving competition, rewarding risk reduction, supporting cyber resilience, and considering how and if insurance products reflect the current geopolitical, climate, and technological conditions. 

For small businesses, insurance should be a safety net, not a breaking point. 

We are not leaving our advocacy there. Business Chamber Queensland will continue working with our partners and government to support more sustainable insurance for Queensland business.