IAG says more government support is needed to help small regional enterprises that face the vulnerability of being underinsured or having no insurance at all.

In a new report, the insurer says the modest cash reserves of small businesses severely impacted by covid and climate-related events have proven insufficient to guarantee that they are adequately insured.

The report refers to an Australian Bureau of Statistics (ABS) survey that found that small businesses are almost twice as likely to report that they found it difficult to meet financial commitments compared to large establishments.

The insurer says more assistance is needed given smaller enterprises’ reliance on insurance payouts following disasters to help restore their operations.

“Without insurance support they would be more likely to cease operation,” the report said.

IAG says small regional operations are more likely to be unaware of the risks they face and not to have adequate cover for events such as floods and bushfires.

It says governments need to step up education of rural communities about the importance of insurance and provide financial support to ensure they have the financial means to be appropriately covered.

The recommendations come as part of the report’s outlook on the impact of natural disaster events on regional communities, particularly rural enterprises.

The analysis found that 72% of the economic impact felt after the 2019-20 “Black Summer” bushfires impacted small businesses, amounting to a $1.8 billion reduction in GDP.

The report outlines key climate resilience projects and says government needs to play a more prominent role in helping safeguard regional businesses from crippling financial costs.