MPs have voiced concerns that mitigation work has failed to provide premium relief, after small businesses told a federal inquiry their efforts to reduce exposure have been futile.

“They’ve done everything from installing fire hose reels to all sorts of mitigations … they’re just getting no response from the market,” Liberal senator Paul Scarr said at a Joint Committee on Corporations and Financial Services inquiry hearing yesterday.

He is on the committee, which is examining insurance challenges facing small businesses and is expected to report findings by October 27.

“This situation where clear mitigants aren’t being considered …  the collective impact of all these issues is for us as a committee to sit here and say the insurance market’s failing. It’s failing the people of Australia in a number of ways,” Senator Scarr said.

“It’s unacceptable that people carrying on small businesses or living their lives simply cannot secure either the insurance protection at all, or [cover] on terms that are even remotely affordable.”

Motor Trades Association of Australia executive director Bruce Billson told yesterday’s hearing it is disappointing insurers have not “rewarded” small businesses that take mitigation measures.

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“I’ve been urging people to have more of a relationship with their insurance … a need to stay involved,” Mr Billson said.

“What’s covered? What’s not? What risks have been identified? What steps can you take to mitigate those risks, and then saying to the insurance industry, ‘Don’t go around telling everybody that risk mitigation is rewarded.’ It’s frankly not. So you can do all the things that anyone can ever ask of you, and there’s no financial recognition … It is frustrating.”

Housing Industry Association chief executive industry and policy Simon Croft says the price of insurance is not the only issue.

“It is also access to insurance. Many insurers have become increasingly risk averse towards the construction sector. A particular source of frustration is that many builders believe insurers are not adequately recognising long-term risk performance,” he told the hearing.

Committee chair Senator Deborah O’Neill says insureds are “not seeing any respite from increasing premiums”, despite the creation of the cyclone pool and other measures to improve resilience.

“We have had a litany of complaints across every ... imaginable sector, across the entire country, about an inability to actually access insurance, increasing underinsurance or self-insurance now becoming people’s only option to ... keep their business in the marketplace,” she said.

Lloyd’s chief of market performance and strategy Rachel Turk, who spoke from the UK, says risk is growing, “and that could be due to increased prevalence of natural catastrophe risks. Sometimes it could be due to new risk vectors such as the use of AI to drive more cybercrime … So it’s, broadly speaking, similar risk factors impacting across the world to varying different degrees.”