Originally published in the Canberra Times.

Finding adequate insurance cover at commercially viable terms is fast becoming a wicked challenge for small and family businesses.

There have been countless examples of small businesses closing down because they either can't get the insurance they need, or when it is available, they can't afford the prohibitively ridiculous premiums on offer, which in some cases have risen by 200 or 300 per cent.

Eye-watering excesses and a growing list of exclusions often accompany 'take it or leave it' insurance products that in some case undermine the business's ability to operate with any hope of being viable.

We saw this recently with a play centre that was told it would only get insurance at a very expensive price with behemoth excesses if it ditched its ninja obstacle course - its biggest earner. Despite having no claims, a well-developed risk management system, active supervision and monitoring and the help of an experienced broker, there was no insurer 'appetite' to cover this activity. The business was forced to close and the jobs, service to the community and resulting economic activity were lost.

Unlike households who - for many reasons - might choose to be uninsured or underinsured and have options about the level and nature of the risk protection policies they subscribe to, a small business must have insurance covering areas such as public liability.

If a small business isn't insured, it cannot engage in trade and commerce.

Live entertainment and music venues have been heavily affected by the lack of suitable insurance cover to continue what they have been doing for decades. While small professional services firms face skyrocketing insurance costs despite making no claims.

In sectors, such as amusement, leisure and recreation, the insurance crisis is so dire we were asked to look at an alternative model, known as a Discretionary Mutual Fund.

Our initial report called The Show Must Go On and subsequent further research and reports backed the creation of a DMF to prevent forced business closures, job losses and a reduction in activity that is important to livelihoods and communities, particularly in regional Australia.

Crucially, a DMF would be able to impose conditions of entry standards for members and enforce strong risk-management culture and procedures, reducing the likelihood of accidents.

Two years on, it is disappointing our major recommendations, including initial government support to set up a DMF, have not been embraced.

Over summer we've seen floods, storms and bushfires devastate some small businesses. The insurance sector can do more to be clear about what is and is not covered when a disaster hits a small business. Despite the reassuring advertising, complaints to regulators about claims being denied and a lack of responsiveness by insurers remain high.

We are already hearing complaints about insurance companies still holding up claims from terrible floods last year and a federal parliamentary inquiry is examining the response. Typically, these claims are mainly related to property, public liability and business interruption issues.

Two years ago, we conducted an inquiry into Small Business Natural Disaster Preparedness and Resilience which found insurers were uninterested in the steps individual small and family businesses take to mitigate disaster risk, or dismissive of them. It had zero impact on the availability and the pricing of their premiums as insurers say they look at risk across a community-wide or industry-wide basis.

It's frustrating many small, family and farming businesses are individually doing what's being asked of them but are seeing no upside to pricing premiums and availability and affordability of insurance cover.

With so many people now working from home, these home-based businesses need to check in with their insurer to make sure they are not on the wrong side of their cover.

Does their household insurance policy cover the two or three Harley Davidsons a business might be repairing in the home garage, if it caught on fire?

Is the business and customer protected if a patron slips on a wet floor and is injured at a home salon? And just how many assistants can you have in your home office helping with your digital media business or chooks producing eggs for roadside sale before your home base starts to not look like a 'household' by insurers?

This is all about important communication a business should have with their insurers and brokers, but it has to be both ways.

The insurance sector has explained the problem is a global one, described as a hardening of the market which means capital is scarce, reinsurance is difficult to obtain and risk appetites are low. In its 2022 annual report the Insurance Council of Australia indicated it would be a priority to address the availability and affordability of insurance.

More than a year ago, the regulator APRA urged the insurance industry to invest in "simplification across products, systems and processes".

For small businesses, insurance, while always vital business precondition, is no longer a once-a-year payment (with a likely inevitable modest price increase) that could be quickly sorted and the business owner could move on to the many other responsibilities of running a business.

It now requires active engagement, close attention to risks and their management, often data collection and collaboration with a specialist broker to navigate this 'hardened market' to source the cover that is needed, and a hefty uplift in cost even the Reserve Bank has called out as quite extraordinary.

And yet, still too many small businesses are not able to access and afford the insurance they need.

I'm pleading with the insurance sector to help small business by mapping out pathways to solutions to give small business the chance to stay in business. Urgent and decisive action is needed to ensure essential insurances for small businesses are understandable, accessible and affordable.