Insurance giant IAG has submitted detailed input to a major federal inquiry, warning that rising risks are making it harder for small businesses to stay protected and viable.
The submission, released today, stresses how critical affordable insurance is for thousands of Australian enterprises facing more frequent natural disasters and cyber threats.
The Changing Risks Hitting Small Businesses Hard
Small businesses form the backbone of the Australian economy. Nearly 2.65 million of them operate across the country, making up over 97 percent of all businesses and employing millions of people.
Yet the environment they face grows tougher each year. Natural disasters strike more often and with greater force. Floods, bushfires, storms and hail have driven up claims and premiums in many regions. At the same time, cyberattacks now threaten even the smallest operations, with data breaches and ransomware causing serious financial hits.
IAG notes these pressures sit alongside broader economic challenges. Labour shortages, construction delays, supply chain problems, ongoing inflation and heavier regulation all add strain. Many owners juggle multiple roles and find it hard to keep up with complex insurance needs.
A fresh IAG survey reveals the shifting priorities. More than 70 percent of small businesses surveyed named cyber protection as their top future insurance need. This highlights how modern threats have moved from emerging to essential.
IAG’s Long History Supporting Aussie Businesses
IAG traces its roots back more than a century in Australia. The company operates major brands including NRMA Insurance, CGU and WFI. These names help thousands of homegrown businesses prepare for the unexpected, respond quickly and recover stronger.
Insurance gives small business owners the confidence to operate daily. It protects livelihoods, meets legal requirements and helps absorb shocks from severe weather or sudden losses. Without reliable cover, one bad event can force closures and job losses.
IAG delivers its products through two main paths. Retail channels, such as direct NRMA offerings, suit many simpler needs. Intermediated channels, often involving brokers, support more complex commercial risks through CGU and WFI. This dual approach lets the insurer reach different segments effectively.
The company actively works to reduce overall risk. It invests in research, promotes practical mitigation steps and helps businesses understand their specific exposures. Stronger resilience benefits everyone by lowering claims and keeping premiums more stable over time.
Practical Solutions Already In Place
IAG is not just identifying problems. It is rolling out tools to address them directly.
For cyber risks, the company offers Cylo. This product blends insurance protection with active monitoring and incident response support. It helps small businesses spot threats early, cut their exposure and limit damage when attacks occur.
On the natural disaster front, NRMA Insurance now automatically includes flood cover under property and business interruption policies. This change provides stronger protection against rising flood risks without customers needing to seek it out separately.
These initiatives show how insurers can adapt products to meet real-world needs. By combining cover with prevention and response, IAG aims to make insurance more effective for busy small business owners.
The company has also invited inquiry committee members to visit its 24/7 Major Event Command Centre in Hurstville, New South Wales. There, advanced mapping and rapid assessment tools deliver real-time support during severe weather, helping customers recover faster.
Five Key Recommendations To Build A Stronger System
In its submission, IAG puts forward five clear areas for government focus to deliver better outcomes.
- Resilience: Keep investing in risk mitigation infrastructure, especially in high-risk zones prone to natural perils.
- Regulation: Simplify rules to cut complexity and duplication while keeping strong protections for consumers and small businesses.
- Rates: Examine taxes that push up premium costs and consider ways to ease that burden.
- Reform: Review tort law and civil liability settings to address rising legal pressures.
- Readiness: Expand access to clear information and resources so small businesses can better understand and manage their insurance needs.
These proposals target root causes rather than symptoms. They aim to make insurance more available, affordable and fit for today’s risks across retail and broker channels alike.
Other industry voices, including the Insurance Council of Australia, have made similar calls in their submissions. Common themes include better climate resilience, cyber education and reduced red tape around liability claims.
Why This Inquiry Matters Now
The Parliamentary Joint Committee on Corporations and Financial Services launched the inquiry last year. It examines how well modern insurance products serve small businesses and not-for-profits. Key focus areas include access to suitable cover for public liability, professional indemnity, cyber threats and business interruption.
Submissions closed earlier in March, with a final report due later in 2026. IAG’s input arrives as a timely contribution based on its deep market experience and customer data.
Small businesses already feel the squeeze. Many report higher premiums, coverage gaps or difficulty finding suitable policies, especially in regional and disaster-prone areas. Underinsurance remains a real concern, with some surveys suggesting significant portions of SMEs lack adequate business interruption protection.
When insurance works well, it enables growth and innovation. Owners can invest, hire staff and serve communities without constant fear of one event wiping them out. When it falters, the ripple effects hurt families, local economies and national resilience.
IAG positions itself as a partner in this space. Its century-plus commitment to Australian communities drives the push for sustainable solutions that balance risk, cost and protection.
The coming months will test whether policymakers can translate these insights into meaningful change. With natural disasters expected to intensify and cyber threats evolving rapidly, the stakes are high for the small businesses that power much of daily Australian life.
This moment offers a chance to build a more resilient insurance framework. One that supports rather than hinders the entrepreneurs and family operations at the heart of our communities. The decisions made now will shape how well small businesses can weather future storms, both literal and digital.
