Suncorp stopped providing insurance to tobacconist clients last year, a federal parliamentary inquiry has heard.

Chief executive for commercial and personal injury Michael Miller also told the hearing this morning the group has withdrawn from insurance markets in “islands off the coast of Australia”, including Hamilton Island and ones around Moreton Bay, after Cyclone Debbie struck the region in 2017.

“Tobacconists [are] a very tricky part of the economy right now to insure, and the reason for that is there’s illegal activity in that area,” Mr Miller said.

“Interestingly, though, I think with tobacconists, it’s not only … a tobacconist itself, but if you have adjacent shops to the tobacconist, because there’s incidents of firebombings, you know that can also increase the risk of shops around it.”

The Joint Committee on Corporations and Financial Services is examining small businesses’ struggles to afford insurance.

Mr Miller says the “pure cost of rebuilding” is one of the reasons behind the decision to stop offering cover to clients on islands.

“The issue for us is just trying to predict, you know … the severity of storms are coming through … secondly, it’s just the cost of rebuilding using barges, labour, getting it to that area.”

Suncorp head of platform business, commercial and personal injury insurance Laura Broughton told the inquiry: “There are a number of industries or segments of industries that we don’t participate in purely because it rocks the portfolio too much. And if we continue to participate in them with the claims that we see, we’d end up having to put up costs for everyone.”

She said “tobacco is the only one” Suncorp has quit recently.

“We don’t do it often, and we don’t do it willingly,” Mrs Broughton said. “We try and pull our other levers first, whether it’s pricing levers or higher excesses … because it’s not good for the marketplace as a whole to have insurers moving in and out of segments frequently.

“So we, and I think most other large insurers, would say we don’t do it easily or quickly. We try and look at every other option first before we move out, and even with tobacconists, we stopped writing new business last year, but we kept our existing policies in the hope that maybe we could still participate in tobacconists ... keeping our existing customers and offering renewals, but we just wouldn’t write any more.”

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