Business NSW chief executive Daniel Hunter warned of an “insurance crisis” as premiums spiralled out of control across the state.

“Many NSW businesses now find themselves either uninsurable or unable to afford the soaring cost of insurance,” he said. “If we don’t get this under control,the entire economy will feel the impact.”

A Business NSW survey taken in December 2024 found that 64 per cent of businesses in the state were not fully insured against catastrophic events.

“The state and federal governments need to step up and do something now,” Hunter said.

Bennett is worried many more firms in her area will be unable to afford cover.

“I’m sure there are businesses out there operating with no insurance because it’s just beyond their capacity to pay,” she said.

Hunter called for urgent reform of state government taxes and charges on insurance policies,especially the emergency services levy,which adds about 20 per cent to business insurance premiums.

Business NSW estimates that Bennetts Steel would have paid $2497 a year less for the same policy if the firm was located in Queensland,which does not have the emergency services levy.

“The Tweed River has become the dividing line for business insurance,” Hunter said,referring to the border between NSW and Queensland.

There has beenincreased scrutiny of the insurance industry in the aftermath of Cyclone Alfred,which caused widespread flooding in South East Queensland and north-east NSW this month.

A spokesperson for the Insurance Council of Australia said the changes in the price of cover were being driven by ongoing inflation in the building and motor repair sectors,the jump in reinsurance costs globally,the rising cost of extreme weather,and the increasing value of Australian assets.

“As we have seen in the last week,Australia’s most densely populated areas on the east coast are exposed to our most expensive extreme weather events – a scenario that’s unlikely to change quickly,” the spokesperson said.

“Investment in mitigation infrastructure,changes to land use planning and building codes,home buyback programs,as well as the removal of unfair taxes and levies are the only actions that will help stabilise insurance premiums.”

According to the council,the NSW government collected about $3 billion from taxes on insurance premiums last financial year,with the emergency services levy alone raising more than $1.5 billion.

Opposition Leader Peter Dutton on Tuesday warned that a Coalition government wouldconsider forcibly breaking up insurance companies to ensure a more competitive market.

He said it was “completely unacceptable” that many Australian consumers either could not get insurance or faced “astronomical premiums”.

Despite soaring insurance costs,a quarterly Business Confidence Index based on the Business NSW survey rose in March to its best level in almost three years,although the level of confidence overall is relatively low by historical standards.

Business sentiment probably improved due to the widely anticipated 0.25 percentage point interest rate cut by the Reserve Bank in February.

The survey found that 81 per cent of firms in the state were planning to maintain the same headcount or hire additional staff during the next three months,while about one in five businesses planned to cut staff.

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