Small businesses situated near tobacconist shops in Melbourne are increasingly facing difficulties obtaining insurance coverage amid a rise in firebombing attacks linked to the illicit tobacco trade. The trend has intensified following a recent incident in Richmond where a firebomb destroyed a tobacco retailer and damaged nearly a dozen adjacent stores, necessitating the deployment of 80 firefighters.
Since 2023, Australian government data shows over 200 firebombings targeting commercial and residential properties have been linked to criminal syndicates competing for control over the illegal tobacco market. This escalation has prompted insurers to withdraw or limit coverage for businesses located close to tobacconists, fearing they may be collateral damage in such attacks.
A Melbourne retailer, who requested anonymity, reported that their insurer refused to renew their policy solely because their premises are “a few doors down” from a tobacconist. Attempts to obtain insurance elsewhere often resulted in quotes excluding fire cover altogether. The retailer noted that relocating was not a viable solution, especially given the uncertainty of where tobacconists might move in the future. Legitimate tobacconists themselves are also experiencing challenges securing insurance, as some syndicates have targeted them to expand illegal revenue streams.
Skye Cappuccio, chief executive of the Council of Small Business Organisations Australia, expressed concern about the growing obstacle faced by businesses seeking affordable insurance in proximity to tobacconists. She highlighted that small businesses should not bear the financial fallout of criminal activities beyond their control. Cappuccio called for coordinated action from government, law enforcement, and regulators to tackle the illicit tobacco trade while addressing broader issues of rising insurance costs and the availability of affordable cover for small enterprises.
According to the Australian Criminal Intelligence Commission, businesses near sites of tobacco-related firebombings suffer from reduced foot traffic, declining revenue, and damage to their reputations. Although insurers have not publicly defined what constitutes “close proximity,” insurance brokers typically regard a distance of about 20 metres from a tobacconist as a risk factor. Conversely, tobacco retailers operating within shopping complexes are generally considered a lower risk.
The illicit tobacco market in Australia remains substantial, with the Australian Bureau of Statistics reporting that 80% of cigarettes smoked nationwide in 2025 were untaxed, counterfeit, or otherwise illegal. These products may sell for as little as $10 per packet compared to over $40 for legally taxed cigarettes. This disparity has spurred political debate around whether reducing tobacco excise taxes could discourage illegal sales by making legal products more affordable. Health experts, however, advocate for stronger enforcement measures focused on intercepting illegal tobacco at Australian ports.
Among insurers altering their policies, Suncorp has ceased offering insurance to tobacconist retailers altogether, including renewal for existing customers. However, the company stated that businesses near tobacconists can still be considered for coverage on an individual basis, depending on location and other risk factors. Likewise, QBE Insurance emphasized that decisions regarding policy terms and pricing are evaluated case-by-case, noting that shifts in risk profiles directly affect insurance availability and conditions.