Dry-cleaners say rising premiums are causing “huge stress” and insurers view their industry as high-risk without considering individual business differences.

The industry notes it is regarded as a big risk because of fires that have mostly hit laundry plants – and to a lesser extent dry-cleaners – resulting from spontaneous combustion of drying linen. Faulty wiring has also caused some blazes.

But the Drycleaning Institute of Australia says all dry-cleaners and small commercial laundries have been unfairly grouped together.

“It appears that the behaviour of a small number of businesses is negatively affecting the entire industry,” the institute writes in a submission to a federal parliamentary inquiry on small business insurance.

“Those with long histories of no claims and clear examples of following best practice are not being recognised with lower premium increases or given fair consideration.”  

Examples include a Sydney dry-cleaning business having its premium nearly double to $5700 from $3100.

In southwest Victoria, a single-storey dry cleaner with a small laundromat paid $11,241 for the year starting July 2024, compared with $6504 six years earlier. Another business’ premiums increased 20% and 25% in consecutive years.

The institute says over the past nine years it has received more calls and emails from members, non-members and some landlords asking for help finding cover or requesting recommendations for insurance brokers due to “astronomical premium increases” or underwriters withdrawing from the market.

A member survey found cases in which businesses were left scrambling after underwriters withdrew just days before policy expiry.

“If underwriters choose to withdraw – and with only two underwriters offering this coverage in Australia – dry-cleaning businesses may be forced to close,” it says.

The submission calls for the insurance industry to work with dry-cleaners to develop best practices that can be applied across businesses, to reduce risk and premiums.

It urges brokers and underwriters to ask more detailed questions on risk mitigation measures in place and to give greater consideration to the degree to which a dry-cleaner is also undertaking laundry work.

The institute also proposes commercial lease changes, so landlords are responsible for the building insurance while business tenants source cover they require to operate.

Find the submission here.

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