Micro and small businesses in Australia have varied perspectives on business insurance, influenced by their industry, business experience, and growth objectives, according to a recent QBE report.
The findings indicated that businesses with insurance experience key benefits, with 79% reporting increased peace of mind, 81% feeling secure in their operations, and 53% more confident in making financial decisions that support expansion.
The report stated that 83% of micro-SMEs – businesses with fewer than 10 employees, representing up to 2 million enterprises – are confident in their current level of insurance coverage. The data suggests that insurance plays a role in supporting business continuity and mitigating financial risks.
Micro-SMEs are a significant component of the Australian economy, operating in an environment marked by rising costs, supply chain challenges, and evolving consumer behaviour.
According to QBE, 42% of micro-SMEs have reported revenue growth over the past three years. However, financial vulnerabilities remain, with 29% stating they could not absorb an unexpected financial loss exceeding $10,000, and 23% indicating they could not withstand any financial disruption without insurance protection.
QBE managing director, consumer, Julie Starley noted claims data showing that the average payout for an Australian micro-SME for unforeseen damages – including to property and subsequent interruption to the business – is over $10,000, a cost that 52% of Australian micro-SMEs could not afford.
“Business insurance empowers business owners to navigate challenges and seize opportunities. Our research highlights the importance of aligning coverage with business growth to ensure resilience and long-term success,” she said.
Australian businesses are facing increasing financial stress, according to the latest Business Risk Index (BRI) from CreditorWatch. The report highlighted rising insolvencies, payment defaults, and legal actions as indicators of worsening business conditions.
Key findings from the BRI include:
The QBE report identified several risk management strategies adopted by micro-SMEs, including reducing costs (40%), building financial reserves (38%), and diversifying their offerings (25%).
The top business priorities include increasing profitability (50%), expanding the customer base (43%), and maintaining cash flow stability (42%).
QBE categorised micro-SME owners into four key groups based on their motivations and approach to risk:
Despite differences in business priorities, insurance remains a critical factor in risk management across all groups.
However, the report highlighted that 59% of micro-SMEs have not reviewed their insurance since starting their business, potentially leaving them underinsured as they expand, hire employees, or acquire new assets.
“Businesses grow, and so do their risks. Regular policy reviews ensure that coverage is not only up to date but also suitable to the challenges and opportunities faced by micro-SMEs. This allows them to focus on innovation and growth with confidence,” Starley said.
The report suggests that aligning insurance strategies with business development and considering flexible policy options may help micro-SMEs safeguard their long-term stability.
