Donna Turnbull (pictured) came to the recent Underwriting Agencies Council (UAC) Market Exchange in Adelaide hunting markets that would write what her existing ones often won't: nightclubs, asbestos buildings, buildings with expanded polystyrene. Then she named the one that has overtaken them.

"It used to be tattooists, now it's gone to the tobacco shops," said Turnbull, a broker and account executive at SUREWiSE based in South Australia's capital.

Turnbull said cover has not disappeared, but what remains is barely worth having. Premiums have reached levels she describes as ridiculous and excesses sometimes run as high as the premium itself. Underwriters have also started asking what a shop actually sells and what hours it keeps, which pulls convenience stores into the same conversation.

Her characterisation of the excess is echoed in broking commentary. CRM Brokers has reported that where local insurers remain willing to write properties occupied by tobacco retailers, higher excesses on fire or malicious damage claims are not uncommon, sometimes in the vicinity of $100,000 and above. Where no local insurer will write it, the firm said overseas markets have to be approached, generally at a much higher premium.

Who ends up paying

The people carrying the cost are frequently not the ones generating the risk. Ingrid Ibbotson, business development manager at Hutch Underwriting, said property owners are discovering this late.

"Property owners don't realise that if they have a tobacconist as a tenant, they won't be able to get insurance – or their only option will be very expensive," she said to Insurance Business during an interview at the UAC Market Exchange.

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Strata specialists Archers have reported that insurer focus on schemes containing tobacconists has led to renewals being refused, or to increased premiums and fire excesses, with all lot owners required in the first instance to bear costs that can run two or three times higher than if the tobacconist were not operating within the scheme.

The cost can be moved, but not automatically. Writing for Archers in January 2026, Todd Garsden, partner at Mahoneys Lawyers and Advisors, set out a provision in the regulation module allowing a body corporate to adjust lot owner insurance contributions to fairly reflect the proportion of total risk attributable to activities carried on in a particular lot. On that reading, the increased cost can be recovered from the owner of the lot the tobacconist occupies, even where the tobacconist is a tenant.

Garsden wrote that linking the increase to the tobacconist, and quantifying it, would typically require a statement or calculation provided by the insurer or the insurance broker.

A body corporate cannot recover from the occupier. Garsden noted that a commercial lease will usually allow the owner to seek recovery from the tobacconist tenant or terminate the lease, and that termination may make more commercial sense than absorbing the increase. His firm more often recommends a by-law regulating the use of a lot by tobacconists, to prevent the problem arising.

The question underwriters are asked first

"In the 5 meetings I've been to since launching commercial strata, the first question every time is: will you cover tobacconists?" Ibbotson said.

Her answer at present is no. The underlying problem of organised crime has not eased. In July, ABC current affairs programme 7.30 reported that more than two years after Melbourne's tobacco wars began, recent firebombings showed competition for control of the illicit market was continuing. Despite attempts to crack down on the trade, access to cheaper black market product, the ABC found, has never been easier.

Read next: Insurers pull back as tobacco shops face rising arson attacks

Ibbotson said every strip of shops now has a tobacconist, and pointed to Victoria and regional New South Wales as the concentration. In another state, regulation has moved faster than capacity. In May 2025 Queensland's Crisafulli government introduced legislation under which landlords who knowingly lease buildings to illicit tobacco and vape traders would face one year of imprisonment or more than $160,000 in fines.

The New South Wales Small Business Commissioner has issued a statement urging property owners to consider insurance risks before entering or renewing a lease. Last month, Ibbotson said Hutch was examining whether there is a workable position where a single tobacconist sits in a strip of ten shops, as distinct from a single-tenant situation. Ten shops spread the exposure. One does not.