Insurance is the steepest-rising cost in Australian small business — up 51.7% between March 2020 and March 2026, ahead of interest (36.3%), electricity (~26%) and wages (20.3%).
Some small business premiums are up as much as 60% since 2019.
It is also the cost most businesses never test, because it arrives once a year as a renewal notice and gets paid.
What is driving it
Claims are fewer but far more expensive. Severity is rising faster than frequency — larger settlements, higher legal costs, longer tail on liability claims.
Reinsurance costs rose globally, and Australian insurers pass that through.
Natural catastrophe exposure has repriced property risk across much of the country.
Capacity has tightened in specific sectors. Construction, tourism and live events report genuine difficulty obtaining cover or holding previous limits — not just higher prices, but insurers declining to write the risk at all.
What it costs now
For a small, low-risk Australian business:
| Cover | Typical |
|---|---|
| Public liability, $5m, under 10 staff | $400–$700/yr |
| General small business package | $40–$80/month |
| CBD location loading | +10–20% |
The CBD loading is worth knowing about. Higher public exposure and higher commercial property replacement costs mean the same business pays more for the same cover based on postcode.
What actually moves a premium
Five things, roughly in order of impact.
1. Claims history. The largest single factor. A clean three years is worth more than any amount of negotiation. It also means small claims are worth thinking about — a $2,000 claim that lifts your premium $900 a year for three years was a bad trade.
2. Risk controls you can evidence. Documented safety procedures, staff training records, maintenance logs, security measures. Insurers price uncertainty; evidence reduces it. Most small businesses have these and never mention them at renewal.
3. Excess structure. Raising your excess from $500 to $2,500 can meaningfully reduce premium. Only do it if you could genuinely fund the higher excess without stress.
4. Sum insured accuracy. Both directions matter. Over-insuring costs premium you do not need. Under-insuring triggers co-insurance clauses that reduce payouts proportionally — the worst outcome, discovered at the worst moment.
5. Broker versus direct. A broker who knows your sector can access markets you cannot and argue your risk profile properly. For anything beyond a simple package, generally worth it.
At your next renewal
Start 60 days out. Renewal notices arrive with a deadline designed to make you just pay it.
Ask for a claims history summary. Know what the insurer knows.
Document your risk controls in writing and provide them proactively.
Test the market — at least two alternative quotes, on genuinely equivalent cover.
Compare cover, not just price. Exclusions, sub-limits and excess differ enormously between policies that look similar on the summary page. A cheaper policy with a new exclusion covering your main risk is not cheaper.
Review your sums insured against current replacement cost, which has moved substantially since 2020.
Where this sits
Insurance is a real and rising cost. It is also capped as a lever — you can shop it, structure it and control your claims history, but you cannot make it small.
At $400–$700 a year for public liability, a competitive process might save you $150. Worth doing, particularly as part of an annual review alongside utilities and software.
On a $1m business, a 5% price rise returns $50,000. Keep the proportions in mind.
Where to go next
- Switching Business Utilities\n- The SaaS Audit\n- How to Cut Business Costs in Australia\n- The Profit Lever Hierarchy
Sources: AMP Bank GO Small Business Cost Pressure Index 2026; Australian small business insurance market data 2026. Premium ranges are indicative and vary by industry, location, turnover and claims history. General information, not insurance advice — speak to a licensed broker about your specific cover.