Australian insurance providers are significantly reducing their exposure to tobacconists, amid rising concerns linked to a wave of suspected arson incidents tied to the illegal tobacco market.
Brokers reported that underwriters are now highly cautious, making it increasingly difficult for tobacco retailers to obtain or maintain property insurance coverage.
Jeffrey Forbes, director at Consolidated Insurance Brokers, said the market has changed notably in the past year and a half. He cited examples where annual premiums on properties selling tobacco have more than tripled.
“For an industrial mid-to-high risk property that was worth about $20 million, we might’ve seen a premium of between $40,000 to $60,000 and expected that to be normal,” he said, as reported by ABC. “This one was coming in at about $220,000.”
The added costs are being passed along to other tenants in shared properties, creating additional financial strain for unrelated businesses.
Store owners say they are struggling to manage the spike in insurance costs.
Ben Tran, a tobacconist franchisee in Ipswich, said many in the sector are unable to meet insurers’ new criteria.
“It’s getting really tough. I’ve got mates who can’t even get insurance for their shop, and they’re stuck because that’s a requirement from the landlord,” he said, as reported by ABC.
He added that while he has invested in physical deterrents – such as bollards, reinforced windows, and security smoke systems – these have only marginally improved his insurance outlook.
He also noted declining cigarette sales, estimating a 40% downturn over the last six months, has made recovery more difficult.
Forbes warned that insurers are grouping all tobacco-related businesses under the same risk profile, regardless of their individual compliance history.
“Different states are taking different approaches but as far as insurers are concerned, they’re all lumping them together as being the same problem,” he said.
The Insurance Council of Australia (ICA) acknowledged the issue, stating that some underwriters may be adjusting their risk assessments based on recent high-profile incidents. A spokesperson encouraged business owners to use brokers who can help explore more tailored insurance options.
“There have been a number of widely reported incidents regarding tobacconists and the illegal tobacco trade. Some insurers may be taking this into account when pricing or offering insurance for commercial landlords and businesses,” the spokesperson said, as reported by ABC.
Meanwhile, QBE Insurance has released guidance for brokers and property owners, urging greater attention to fire containment infrastructure.
David Sullivan, practice lead in property risk management at QBE Australia Pacific, stressed the value of fire separation systems.
“For example, if a fire starts on one floor of an office building, fire-rated walls and floors can slow its spread to other levels. That extra time can make all the difference for the people evacuating and for the emergency crews responding,” he said.
He added that many vulnerabilities stem from overlooked maintenance.
“When working with customers, we often find issues like unsealed openings in firewalls, unprotected ducting and vent work, or doors that aren’t actually fire-rated. That’s why regular inspections and maintenance are so important, they can help identify and address potential risks ahead of time,” Sullivan said.
He advised routine inspections and adherence to building code requirements under the National Construction Code. Responsibility for compliance lies primarily with property owners, although tenants must also ensure their modifications do not compromise safety standards.
