News Regulations27 Feb 2026

Australia:Insurance Council calls for tax reform and resilience measures in small business insurance inquiry


The Insurance Council of Australia (ICA) has lodged four submissions to a federal parliamentary inquiry into small business insurance, urging reforms to insurance taxation, climate resilience, workplace mental health and cyber risk management. The inquiry, chaired by Senator Deb O'Neill, is examining how to improve the affordability and accessibility of cover for Australia's 2.5m small businesses.

The ICA said small businesses face mounting pressure from extreme weather, inflation and regulatory complexity. Since 2020, extreme weather has generated more than A$4.5bn ($3.2bn) in insurance claims, while construction costs have surged 40%. Small businesses employ nearly half of the private sector workforce.

These pressures are compounded by state-based taxes, which add between 9% and 40% to premiums. In 2024–25, state governments collected A$8.9bn in insurance taxes, A$1.6bn more than the industry’s total profits.

The ICA’s submissions focus on three critical insurance lines: business pack and interruption insurance, workers’ compensation and cyber insurance. It warned that psychological injury claims are straining compensation schemes, costing more than three times physical injury claims and requiring significantly longer recovery times. Cyber insurance uptake remains low among small businesses, despite rising AI-driven threats, highlighting the need for expanded risk education and better data sharing.

ICA Chief Executive Andrew Hall said, “Small businesses are the engine room of Australia’s economy, and affordable, accessible insurance is essential to their resilience.” He added that coordinated action between government, industry and small businesses is necessary to manage complex and evolving risks effectively.

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