Businesses next to tobacco shops in Melbourne denied insurance — The Guardian
In Melbourne, Australia, small businesses near tobacco shops are being denied insurance or offered coverage at an excessively high price due to a series of arson attacks linked to the illegal tobacco trade. This was reported by The Guardian.
The situation worsened after a series of attacks involving incendiary devices. During a recent fire in Richmond, a tobacco shop and nearly a dozen neighbouring stores were destroyed. Eighty firefighters were deployed to extinguish the blaze.
Problems with insurance coverage
One Melbourne business owner, who asked not to be named, told the publication that an insurer had refused to renew his policy because his establishment was located “a few doors down” from a tobacco shop. According to him, other insurance quotes he received did not provide coverage for fire damage.
Insurance brokers generally consider businesses located within about 20 metres of a tobacco shop to be risky, although insurers themselves do not disclose the exact criteria for “close proximity”. Tobacco shops in shopping complexes are considered less risky.
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Sky Cappuccio, chief executive of the Council of Small Business Organisations Australia, said that access to insurance and its cost for businesses near tobacco shops are becoming increasingly problematic. According to her, small businesses should not bear the financial consequences of criminal activity that they cannot control.
Consequences of the illegal tobacco market
According to government data, criminal syndicates may have been involved in more than 200 arson attacks on commercial and residential premises in Australia since 2023. According to the Australian Criminal Intelligence Commission, businesses near such incidents also lose visitors, revenue and reputation.
The Australian Bureau of Statistics reported that in 2025, illegal cigarettes accounted for 80% of all cigarettes smoked in the country. An untaxed pack could cost about 10 Australian dollars, while a legal one cost more than 40 dollars.
Suncorp said that it no longer offers insurance to tobacco shops, including by not renewing policies for existing clients. At the same time, businesses near such establishments may be eligible for insurance: decisions are made individually, taking into account the type of business and the risks of the specific location. QBE also said that a change in the risk profile may affect the price, terms or availability of coverage.
