Why Battery Fire Risk Is Changing

Australia’s transition to renewable energy is accelerating the installation of battery technology across every type of property. Utility-scale battery energy storage systems (BESS) are being deployed to stabilise the electricity grid, while commercial and residential property owners are installing battery storage alongside rooftop solar at a rapidly increasing rate. At the same time, the proliferation of electric vehicles, e-bikes, e-scooters, power tools, and other lithium-ion battery-powered devices means that virtually every commercial building in Australia now hosts battery technology in some form.

The scale of the fire risk this creates is not theoretical. Fire and Rescue NSW recorded 332 lithium-ion battery-related incidents in 2025, nearly one a day. In Western Australia, there was a fire caused by lithium-ion batteries almost every second day in 2024, making it the worst year on record. The Australian Competition and Consumer Commission has received more than 230 product safety reports relating to lithium-ion batteries over a five-year period. Across Australia, fire services consistently describe battery-related fires as one of the fastest-growing fire risks facing the community, and the data shows the incident rate increasing year on year.

For commercial property owners, this is not a peripheral risk, it is a mainstream property hazard that demands specific attention in risk management planning and insurance review.

The Central Hazard: Thermal Runaway

Understanding why battery fires are so dangerous begins with understanding the science behind them. The primary fire risk associated with lithium-ion batteries is a process known as thermal runaway — a self-sustaining chain reaction in which a battery cell generates heat faster than it can dissipate it. Once thermal runaway begins, the battery produces flammable and toxic gases that can ignite, potentially causing a fire or explosion that spreads rapidly to adjacent battery units or other building materials.

What makes thermal runaway so challenging from a property risk perspective is that, once initiated, there is currently no widely accepted method to stop a lithium-ion battery fire. In many cases, the only available response is to allow the fire to burn out while focusing on preventing spread — a scenario that can result in extensive property damage and prolonged business disruption.

The situation is compounded by changes in battery cell technology. As individual cell capacity has grown, the failure of a single cell can now produce sufficient flammable gas to create a hazardous atmosphere within a battery enclosure — a threshold that previously required multiple cell failures to reach. This means the risk profile of modern high-density battery installations is not directly comparable to earlier technology.

Conventional fire suppression systems are not designed for lithium-ion battery fires. Clean agents and aerosols that are effective against conventional electrical fires do not stop thermal runaway once it is underway. This is a critical distinction that building owners and their fire safety advisers need to understand when assessing whether existing fire protection infrastructure is adequate for the battery technology now present in their building.

Battery Risks Specific to Commercial Property

While battery fire risk affects all property types, commercial buildings present a particular set of exposure scenarios that property owners should be across.

Building-integrated battery energy storage systems

As solar installations become standard on commercial rooftops, battery storage systems co-located with those installations are increasingly common. These systems — ranging from small commercial units to substantial energy storage installations — present fire risks that are meaningfully different from conventional electrical equipment. The location of the battery system relative to the building structure, other tenancies, and fire exits has direct implications for how a fire event would unfold and what damage could result.

Electric vehicle charging infrastructure

The installation of EV charging stations in commercial car parks and loading areas is accelerating. While the charging station itself is not the primary hazard, the vehicles connected to it are. A lithium-ion battery fire in a vehicle within an enclosed car park, or adjacent to a building facade, presents a significant structural fire risk. NSW strata reforms that came into effect in mid-2025 prevent owners corporations from blocking EV charger installations on aesthetic grounds alone, meaning the volume of EV charging in commercial and mixed-use buildings is likely to increase.

Tenant-operated battery equipment

Many commercial tenants operate battery-powered equipment as part of their business — from forklifts and warehouse machinery to data centre UPS systems and telecommunications backup power. The charging infrastructure for this equipment, if not properly maintained and managed, is a recurring source of battery fire incidents in commercial and industrial buildings. Landlords who are not across what their tenants are operating and charging on the premises may be unaware of the battery hazard profile within their own building.

Mobility devices in common areas

E-bikes and e-scooters are increasingly being stored and charged in commercial building common areas, car parks, and loading docks — by tenants, employees, and delivery personnel. In South Australia, around one in four battery fire incidents in the first half of 2025 involved mobility devices. For a commercial property owner, a fire ignited by an e-bike charging in a basement car park or common area represents a significant property and liability exposure.

Higher-density installations and proximity risk

Where multiple battery systems or units are installed in close proximity — whether in strata industrial buildings, technology facilities, or retail centres with rooftop solar storage — the risk of fire spreading between units increases. The separation distance between battery systems is a key variable in how a fire event escalates, and reduced separation in higher-density installations can significantly amplify the potential loss.

Risk Management Recommendations for Commercial Property Owners

While a battery fire, once started, may be difficult to suppress, there is a well-developed set of preventive and mitigation measures that can materially reduce both the likelihood and the severity of an event. The following represent the key risk management steps relevant to commercial property owners.

1. Conduct a Battery Risk Audit of Your Property

Identify all battery systems present in your building — including building-integrated storage systems, EV charging stations, tenant equipment, and mobility devices being charged in common areas. Many property owners underestimate the volume and diversity of battery technology now present in their buildings. A clear inventory is the foundation of an effective risk management response.

2. Ensure Appropriate Separation and Siting

Where battery systems are installed, the physical separation between individual units and between the battery installation and the building structure matters significantly. Insurers typically expect a minimum separation distance between battery containers and other units or structures. Where indoor battery installations are involved, the siting of the battery system relative to fire exits, occupied areas, and other high-value assets requires specific assessment.

3. Install Early Detection and Monitoring Systems

Given that thermal runaway cannot be stopped once initiated, early detection is the most important line of defence. Off-gas detection systems — which identify the gases produced by a battery in distress before thermal runaway fully develops — provide the earliest possible warning and the best opportunity to intervene or evacuate. Battery management systems that monitor individual cells and flag abnormal conditions are an expected feature of any well-managed battery installation.

4. Implement Appropriate Ventilation

Mechanical ventilation systems that can extract and expel the flammable gases produced by a battery prior to and during a thermal runaway event are an important mitigation measure for enclosed battery installations. Allowing these gases to accumulate within a confined space significantly increases the risk of ignition and explosion.

5. Install Deflagration Panels Where Required

Deflagration panels are pressure-relief devices installed in battery enclosures to relieve the pressure generated by an explosion before structural damage to the container or building occurs. For enclosed battery installations, these represent an important final mitigation measure to limit the structural consequences of a thermal event.

6. Review Tenant Lease Conditions and Consent Processes

Property owners should review whether their lease agreements address tenant obligations regarding the storage and charging of battery-powered equipment on the premises. Establishing notification and consent requirements for significant battery installations — and maintaining a documented record of what is being operated within the building — is both a risk management measure and a matter of insurance disclosure.

7. Brief Your Fire Warden and Emergency Response Team

Building fire wardens and emergency response personnel need to understand that a battery fire may behave very differently from a conventional fire and that standard suppression approaches may not be appropriate. Ensuring that emergency procedures reflect the battery hazard profile of the building is an important step that is often overlooked.

8. Ensure Regulatory Compliance for Battery Equipment

Regulations covering the sale, installation, and certification of lithium-ion battery-powered devices are tightening across Australian states. In NSW, from February 2026, all e-bikes must carry permanent certification labels on the frame, with fines of up to $825,000 for corporations selling non-compliant products. Property owners and building managers should be aware of the regulatory requirements applicable to battery equipment in their building and ensure that tenants and building users are operating compliant devices.

What This Means for Your Commercial Property Insurance

Battery technology is reshaping how the insurance market assesses and underwrites commercial property risk. Property owners with battery systems on their premises — or tenants who operate significant battery-powered equipment — need to be aware of several insurance considerations.

Disclosure is essential

Battery systems and EV charging infrastructure are material facts that must be disclosed to your insurer. A property owner who fails to disclose the presence of a significant battery storage installation may find that coverage is affected at the time of a claim. This applies equally to the installation of new battery systems mid-policy — your broker should be notified of any material change to your property’s risk profile.

Standard property policies may not be adequate

Conventional commercial property insurance is not designed with battery fire risk in mind. Depending on the scale and nature of the battery technology present in your building, a standard policy may not respond adequately to a thermal runaway event — particularly where the fire causes damage to an adjacent building, results in extended business interruption, or involves environmental contamination from battery chemicals.

Insurers are increasingly requiring documented risk management

The insurance market for properties with significant battery installations is becoming more rigorous in its underwriting requirements. Documented evidence of battery management systems, off-gas detection, appropriate separation, and emergency procedures is increasingly expected as a condition of coverage. Properties that cannot demonstrate proactive risk management may face restricted coverage, higher premiums, or difficulty placing the risk.

Indoor installations attract heightened scrutiny

Insurers typically apply greater scrutiny to indoor battery installations than to outdoor, separated systems. A battery storage system installed inside a building — particularly in a mixed-use or occupied commercial property — will attract specific underwriting assessment. The design, containment, monitoring, and fire protection measures in place will directly influence whether coverage is available and on what terms.

Business interruption exposure can be significant

A thermal runaway event in a commercial building has the potential to render part or all of the premises unusable for an extended period, affecting not only the property owner’s rental income but also the operations of multiple tenants. Understanding whether your loss of rent and business interruption coverage is adequate for the potential duration and scope of a battery-related shutdown is an important review exercise.

Barrack Broking: Specialist Advice for Commercial Property Owners

Battery risk is an emerging risk in commercial property insurance. A standard renewal process that does not specifically address the battery technology present in your building may leave you with coverage gaps that only become apparent at the time of a claim.

At Barrack Broking, we work with commercial property owners across Australia as a specialist commercial property insurance broker, with experience in placing complex and emerging property risks including those arising from battery energy storage, EV infrastructure, and industrial battery operations. We understand how insurers are approaching battery risk in the current market, what documentation and risk management measures they expect to see, and how to structure coverage that responds to the actual risk profile of your property.

If you own or manage commercial property that includes battery storage systems, EV charging infrastructure, or tenants with significant battery-powered operations, we recommend a specific conversation about whether your current insurance arrangements are adequate.

To discuss your commercial property insurance, contact Barrack Broking on 1300 605 101 or visit our commercial property insurance broker page to find out more.

Get in touch with Barrack Broking →

*This Risk Tip is general information only and does not constitute financial product advice. Property owners should seek specific advice from a qualified insurance broker and, where appropriate, a qualified fire safety engineer regarding the battery risks and insurance requirements applicable to their specific property.

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Recent commercial property research confirms what many in the Queensland market are already experiencing firsthand: this is no longer a story about one asset class. The state’s investment fundamentals are broadening, coastal markets are becoming institutional destinations, and a new and more diverse set of buyers is arriving at the table. Understanding what that means for your insurance program is an essential part of protecting the asset value being created.

Queensland’s Commercial Property Market: What the Data Shows

Queensland closed the 2025/26 financial year as the standout performer among the states, lifting its share of national commercial property turnover to 25.4 per cent — up from just 16.9 per cent in 2018/19 — with transaction volumes reaching $22.33 billion for the year. 

What is particularly significant for insurance purposes is not just the volume of activity, but its composition. The Queensland market is no longer concentrated in a single asset class or a single geographic corridor. Risk profiles are diversifying — and that requires insurance programs to diversify with them.

Industrial: Still the Largest Asset Class, but Broadening in Character

Industrial remains Queensland’s largest asset class, though its share of state turnover eased to 29.3 per cent from 36.4 per cent in 2024/25 — a moderation that reflects a broadening of where capital is being placed rather than any waning of appeal. Industrial buying activity this year was notable for its breadth, spanning small owner-occupiers and private investors active in strata industrial product through to large distribution facilities changing hands to institutional and offshore capital.

For insurance, industrial property presents some of the most varied risk profiles in the commercial sector. A small strata industrial unit occupied by a trades business carries a very different risk profile from a large distribution facility with complex plant and equipment, high-value stock, and significant public interface. Sum insured adequacy, business interruption coverage, and machinery breakdown protection are all areas where industrial property owners benefit from specialist advice rather than a standard approach.

Retail: The Standout Performer of the Year

Retail was the standout performer of the year, climbing to 23.4 per cent of state turnover from 17.5 per cent in 2024/25. Strong population growth across the south east, including the Gold Coast and Sunshine Coast, has underpinned trading performance at neighbourhood and sub-regional centres, restoring investor confidence in retail’s income security after several years in which the sector was largely overlooked in favour of industrial and alternative assets.

Retail property insurance carries its own distinctive set of considerations. Public liability exposure is significant in tenanted retail environments, where customer access is high and the landlord’s responsibility for common areas and building fabric is ongoing. Lease arrangements, tenant mix, and the treatment of tenant improvements all affect how a building sum insured should be calculated. Where retail centres anchor mixed-use precincts, the interaction between strata, common property, and individually owned lots adds further complexity.

Aged Care and Healthcare-Aligned Assets: The Year’s Most Significant Shift

The most significant shift in the data was the surge in aged care and medical-aligned assets, up to 9.6 per cent of state turnover from just 1.5 per cent the previous year. This was driven in large part by a number of substantial aged care portfolios changing hands as operators and institutional owners moved to consolidate holdings ahead of continued sector reform. Queensland’s ageing population continues to support long-term demand for this asset class well beyond the portfolio activity that defined this particular year.

Aged care and healthcare property is among the most specialised asset classes from an insurance perspective. These properties carry heightened public liability exposure, complex regulatory compliance obligations, and in many cases operate as going concerns where business interruption and liability coverage must be structured around the care environment, not just the building. Property owners in this space who hold standard commercial property policies without specialist review of the occupancy risk may find significant coverage gaps.

Hotels and Tourism Assets: Institutional in Scale, Complex in Risk

Hotels lifted their share of state turnover to 6.4 per cent from 3.6 per cent, consistent with strong visitor demand across Queensland, with offshore capital a regular feature of ownership given the scale of investment required.

Hotels and tourism assets involve the intersection of property, liability, business interruption, and in many cases liquor-related risks in a single asset. The building replacement cost methodology for a hotel differs markedly from a standard commercial building, and the income protection structure needs to account for the seasonal and event-driven nature of hotel revenue. For properties along Queensland’s coastal corridors — increasingly active investment markets — weather and natural disaster exposure also warrants specific attention.

Office and Development Sites: A More Cautious Environment

Office and development sites both eased back, to 12.8 per cent and 13.9 per cent of state turnover respectively, reflecting a more cautious approach to feasibility and a preference for income-producing assets in the current environment.

For office owners, the post-pandemic normalisation of occupancy patterns continues to create uncertainty around rental income levels and vacancy rates — both of which have direct implications for how business interruption and loss of rent coverage should be structured. Development sites carry construction-phase risks that require separate cover during the build period, with the transition to a completed property policy a critical point of potential exposure.

The Insurance Challenges Facing Queensland Commercial Property Owners

Beyond asset class-specific considerations, there are several insurance dynamics that apply broadly across the Queensland commercial property market right now.

Underinsurance remains a significant and widespread risk

The combination of construction cost inflation over recent years and the rapid increase in Queensland property values has left many commercial buildings insured at sums that no longer reflect replacement cost. A building that was insured adequately three years ago may now be materially underinsured — not because the owner has been negligent, but because costs have moved faster than many renewal review processes have tracked. In the event of a total loss, the consequences of underinsurance are severe and largely irreversible. Regular professional valuation of building replacement cost, independent of market value, is essential.

Natural hazard exposure is a defining feature of Queensland property risk

Cyclone, flood, storm surge, and hail exposure varies significantly across Queensland’s geography, and the insurance market’s assessment of those risks has shifted materially in recent years. Properties in coastal and low-lying areas may face coverage restrictions, higher deductibles, or specific sub-limits for natural hazard events. Understanding exactly what your policy covers, and what it excludes or sub-limits, in the context of Queensland’s natural hazard environment is not optional; it is a fundamental component of risk management.

Vacancy and change of use create coverage gaps

In a dynamic market where assets change hands, tenants turn over, and properties move between uses during renovation or repositioning, the coverage position under a standard commercial property policy can shift without the owner realising it. Extended vacancy periods, changes in occupancy type, and construction or refurbishment activity all have the potential to alter or void coverage under policy conditions that many owners are not fully aware of.

Liability exposure follows tenant mix and public access

A commercial property owner’s liability exposure is not static — it changes with the nature of the tenants occupying the building, the volume of public access, the condition of common areas, and the extent of the landlord’s ongoing maintenance obligations. As Queensland retail centres see increased foot traffic on the back of population growth, and as mixed-use precincts become more prevalent, liability coverage needs to be reviewed in the context of how the property is actually being used.

Strata and body corporate insurance requires specialist understanding

For owners of strata-titled commercial property — increasingly common in industrial, retail and office markets — the interaction between the body corporate’s building policy and the individual lot owner’s contents and liability coverage is a source of frequent and significant gaps. Understanding what the body corporate policy covers, what it excludes, and what the individual owner needs to arrange separately is an area where broker expertise matters.

Why Specialist Brokerage Matters for Commercial Property

Commercial property insurance is not a commodity product. The risks involved — from building valuation and natural hazard exposure to liability, loss of rent, and occupancy conditions — require an adviser who understands the asset class, the insurance market’s current approach to Queensland property risks, and the specific circumstances of your portfolio.

At Barrack Broking, we act as a specialist commercial property insurance broker for property owners, investors and occupiers across Queensland and nationally. Our approach is built around understanding your property, its use, its tenancy profile, and your objectives — and then accessing the insurance market to secure coverage that is matched to your risk, not simply the most convenient option.

We work with property owners across the full range of commercial asset classes — retail, industrial, office, hospitality, healthcare, and mixed-use — and our team has direct experience with the complexity that comes with Queensland’s natural hazard environment, strata arrangements, and the compliance obligations that apply to different property types.

As a principal-owned boutique broker, we bring senior attention to every client relationship. That means your program is reviewed by people who understand commercial property risk at a detailed level, not processed through a call centre or a generic renewal cycle.

Key Insurance Considerations for Queensland Commercial Property Owners

Whether you own a single tenanted retail premises or a diversified portfolio of commercial assets, the following areas are worth reviewing with a specialist broker:

Building sum insured and replacement cost

When was your building last professionally valued for insurance purposes? In Queensland’s current construction cost environment, the gap between insured value and true replacement cost can be substantial.

Natural hazard sub-limits and deductibles

Does your policy respond fully to flood, cyclone, and storm surge events — and are the deductibles applicable to those events proportionate to the risk? For coastal Queensland properties in particular, the detail of natural hazard coverage deserves close scrutiny.

Loss of rent and business interruption

If your property is rendered untenantable by an insured event, does your loss of rent coverage reflect the actual rent roll, and does the indemnity period allow sufficient time for repair or rebuilding in Queensland’s current construction environment?

Liability coverage for common areas and building fabric

Are your public liability limits adequate for the scale and nature of your property, and does the policy clearly address your responsibilities as landlord versus your tenants’ own liability?

Vacancy and renovation conditions

If your property is vacant, partially vacant, or undergoing renovation, are you aware of the conditions your policy imposes, and have you notified your insurer or broker of the change in circumstances?

Strata — what’s covered by the body corporate, and what isn’t

If you own strata-titled commercial property, do you have a clear picture of where the body corporate policy ends and your individual coverage needs to begin?

Talk to Barrack Broking About Your Commercial Property Insurance

Queensland’s commercial property market is growing in depth and sophistication. The insurance programs protecting those assets need to keep pace. If you would like a specialist review of your commercial property insurance arrangements — whether for a single property or a portfolio — the team at Barrack Broking is available to help.

We service clients nationally from our offices in Sydney, Brisbane and Maroochydore, with deep familiarity with the Queensland market and its unique risk characteristics. To find out more about our commercial property insurance broking services, contact our team today.

Get in touch with Barrack Broking →

*This article is general in nature and does not constitute financial product advice. Commercial property owners should seek specific advice from a qualified insurance broker regarding their individual circumstances and coverage requirements.

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Specialists in the product recall insurance space have recently reinforced a message that sits at the heart of effective recall risk management: preparation, not response, determines the outcome. This article draws on that thinking and adds practical context for Australian food and beverage manufacturers.

The Australian Recall Landscape

The scale of the challenge is worth understanding. According to Food Standards Australia New Zealand (FSANZ), the number of food recalls coordinated annually has trended upward over the past decade. FSANZ coordinated 95 food recalls in 2024, a 16% increase on 2023, with undeclared allergens remaining the leading cause, mostly due to labelling errors. In 2025, FSANZ coordinated 92 food recalls — above the ten-year average of 87 — with undeclared allergens accounting for 38% of all recalls, and packaging errors, accidental cross contamination and failure to communicate ingredient changes identified as the main contributing factors.

The cost exposure behind these figures is significant. A 2017 FSANZ report estimated the average direct cost of a food recall at approximately AUD $10 million — and that figure does not capture the longer-term impact on brand reputation and consumer trust. The financial consequences of a serious foodborne illness event extend further still, with a 2022 FSANZ study finding that foodborne illness costs the Australian economy $2.44 billion annually when lost productivity, direct healthcare costs, and premature mortality are taken into account.

What this data makes clear is that the question for a food and beverage manufacturer is not whether a recall could happen, but whether the business is prepared when it does.

Why Recalls Are Becoming More Complex

Several dynamics are increasing both the frequency and complexity of product recall events.

Regulatory scrutiny is intensifying

Regulators have more authority than at any point in recent history to order recalls and shut down production facilities. The number of regulatory bodies with oversight across the supply chain has grown, as has the number of standards that businesses must comply with. Organisations that are not fully across their compliance obligations can be caught unaware by regulatory action, even where the underlying risk is unintentional.

Supply chains introduce new vulnerabilities

Local food manufacturers increasingly source raw materials from international suppliers to manage input costs. This can introduce variability in quality standards, traceability gaps, and ingredient disclosure challenges — all of which are factors in a disproportionate share of recall events. The more complex and extended the supply chain, the harder it becomes to identify the origin of a contamination event quickly, and the broader the potential recall scope.

Social media has changed the reputational stakes

A recall that might once have been managed through direct consumer contact and a quiet shelf removal now plays out publicly, rapidly, and without the manufacturer controlling the narrative. Consumer concern expressed through social media platforms can escalate faster than a formal recall response can be activated, making the first hours of an incident management process more consequential than ever.

The co-mingling problem

As illustrated by significant tampering incidents in the Australian market, produce and ingredients sourced from multiple suppliers is frequently combined, repackaged, or distributed through opaque logistics networks. When a safety concern arises, identifying which batches and which downstream customers are affected becomes a significant operational challenge — one that can only be addressed effectively if the traceability systems and documentation exist to support it.

What Recall Insurance Actually Covers — and What It Doesn’t

Understanding what a product recall policy does and does not respond to is essential before an incident occurs — not during one.

Accidental contamination and mislabelling

account for the substantial majority of recall claims. Coverage in these circumstances is typically triggered where the contamination or mislabelling could reasonably lead to bodily injury, illness, death, or property damage. Common covered losses include the direct costs of removing product from the market, transportation, additional labour, warehouse costs, the cost to restore product to merchantable quality or replace it, and loss of gross revenue during the period of disruption.

An important nuance that manufacturers need to understand is that recall policies do not generally cover product quality issues in the absence of a safety trigger. A product that is substandard, disappointing, or below specification — without a risk of bodily injury or property damage — typically falls outside coverage. This distinction matters significantly in practice: not every mould, for example, presents a health risk, and whether the recall trigger is met depends on whether the specific contaminant or defect clears the bodily injury threshold. This is a determination that needs expert assessment.

Malicious product tampering

Where a product is rendered unfit or dangerous for consumption or creates that reasonable public impression — can also be covered. Events of this nature have occurred in Australia and are not hypothetical. When tampering occurs, covered losses can include recall and disposal costs, media communication expenses, retailers’ costs associated with removing product from shelves, and business interruption losses. Where the product is an ingredient in a customer’s manufactured product, the policy may also extend to some of the customer’s costs — an important feature for ingredient suppliers.

Product extortion

Where a demand for payment or compensation is made alongside a tampering threat — is a distinct scenario from malicious tampering and is treated differently under policy terms. Cover in these circumstances typically extends to extortion costs and the rehabilitation costs associated with restoring the product to its pre-incident market position.

Manufacturers should understand that the difference between these event types is not merely definitional — it affects how the claim is assessed, what evidence is required, and what costs are recoverable.

The Case for Preparation

Recall specialists consistently observe that the most costly recall events are not necessarily the most serious in terms of the underlying product risk — they are the ones where the response is slow, disorganised, or poorly communicated. Preparation directly influences the outcome across every dimension of a recall: the speed of containment, the accuracy of the traceability exercise, the quality of communication with regulators, retailers, and consumers, and ultimately the cost of the claim.

Recall plans need to exist before the incident

A business that is drafting its recall response at the same time it is managing an active incident will be slower, less consistent, and more likely to make decisions that compound the damage. The recall plan should identify who is responsible for each decision, how regulators are to be notified, how product is traced and retrieved, how retailers and distributors are contacted, and how consumers are communicated with.

Mock recalls and simulation exercises are not optional extras

A plan that has never been tested is a plan that contains unknown gaps. Crisis simulation exercises allow businesses to discover, in a controlled environment, where their systems, processes, and communication chains break down — before a live event exposes those same failures under maximum pressure. The first 24 to 48 hours of a recall response are critical; a business that has rehearsed this window performs substantially differently from one that has not.

Media and crisis communications require advance preparation

The reputational consequences of a recall are heavily shaped by how the business communicates. Prepared messaging frameworks, identified spokespersons, and practised media protocols allow a business to lead the communication of an incident rather than reacting to it. A business that communicates promptly, clearly, and credibly in the early stages of a recall will manage the reputational impact more effectively than one that appears slow, evasive, or inconsistent.

Traceability systems determine the scope of the recall

The ability to identify quickly which batches are affected, where they went, and which customers or retailers received them directly determines whether a recall is targeted and manageable, or broad and chaotic. Robust batch tracking, detailed distribution records, and clear supplier documentation narrow the recall population and reduce cost. Gaps in traceability systems, co-mingling of product, and undocumented distribution chains all expand recall scope unnecessarily.

Supplier management is integral to recall readiness

Many recall events trace back to a supplier’s ingredient, a change in a supplier’s process that was not communicated, or a quality failure in imported raw materials. Businesses that have conducted supplier audits, maintained up-to-date ingredient specifications, and built contractual protections around recall liability are better positioned when a supplier-origin event occurs. Those that have not may find they are managing a recall without the information, contractual support, or financial recovery options they need.

Engaging Your Insurance Cover Effectively

Product recall insurance is most valuable when the policyholder actively engages the support available to them — both before an incident and in the critical first hours of one.

Some product recall policies include access to pre-incident advice, planning support, and expert consultants as part of the cover. This can include assistance with recall plan development, mock recall exercises, food safety training, and audit preparation. These resources are available precisely because insurers understand that preparation reduces the frequency and severity of claims — and businesses that take advantage of them are in a materially better position when an incident occurs.

When an incident does occur, the immediate priority is to activate the right support. Engaging a crisis hotline or specialist recall consultant in the first hours of an incident — before making public statements, before deciding on the scope of a withdrawal, and before committing to a course of action — allows decisions to be made with expert input rather than under pressure alone. Following that initial response, the broker should be notified promptly so that the insurer can be informed and a loss adjuster engaged to support the claim process.

Businesses should also be aware of their notification obligations under the recall framework. FSANZ and state food safety regulators have established processes and timelines for recall notifications, and failing to meet these obligations can create regulatory exposure on top of the underlying incident.

Practical Steps for Food and Beverage Manufacturers

Drawing together the observations above, there are several areas where food manufacturers can take concrete action now, irrespective of their current level of recall readiness.

First, review whether a written product recall plan exists and, if so, when it was last tested. A plan that pre-dates significant changes in your product range, supply chain, or distribution network may not reflect your current risk profile.

Second, map your supply chain and assess your traceability capability. If a contamination event were identified today, how long would it take to identify the affected batches, trace them to all current locations, and initiate a retrieval? The answer to that question defines your exposure.

Third, review your allergen and labelling management processes. Undeclared allergens have consistently been the leading cause of recalls over the past decade, with 213 incidents reported over a ten-year period. For many businesses, this risk sits in supplier communication, recipe changes, and label approval processes rather than in the production environment itself.

Fourth, ensure your recall insurance coverage is current, understood, and matched to how your business operates today. If your product is used as an ingredient by another manufacturer, confirm whether your policy extends to that downstream exposure. If your distribution reaches international markets, confirm how those markets are treated under your policy.

Finally, speak to your broker about what pre-incident support is available under your product recall policy. The resources that exist to help you prepare may be more accessible than you expect.

Conclusion

Product recall risk in the food and beverage sector is real, rising, and increasingly complex. The businesses that manage recall events most effectively are not necessarily the largest or the best resourced — they are the ones that have invested in preparation, tested their systems, and understood their insurance coverage before the incident began.

Barrack Broking works with food and beverage manufacturers across Australia and understands the operational and risk management challenges specific to this sector. If you would like to review your product recall insurance arrangements, or if you want to discuss how your current coverage aligns with your supply chain and distribution profile, we welcome the conversation.

*This article is general in nature and does not constitute legal, regulatory or food safety advice. Food businesses with specific concerns about recall obligations should contact a specialist Insurance Broker at Barrack Broking.

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At Barrack Broking, we work with manufacturing clients across Australia and we want to share what is known about this incident, why the manufacturing sector is increasingly targeted, and what it means for how businesses in this space approach cyber risk and insurance.

What Happened

In early June 2026, a Queensland-based food and beverage manufacturer disclosed a cybersecurity incident affecting its operations. Production at multiple facilities was forced to halt, and the disruption cascaded rapidly through its supply chain — with growers, harvesters and logistics operators all impacted as scheduling and intake systems went offline.

The company publicly confirmed it had activated its incident response immediately. Interim manual processes were put in place to support critical functions where possible, and within a matter of days a limited manual operation recommenced at one facility. However, key operational systems remained under restoration for a period, with the business advising supply chain partners not to resume normal activity until further notice.

The attack was subsequently claimed by a ransomware group known as “The Gentlemen,” which listed the business on its dark web data leak site. As is common in this type of incident, no data had been published at the point the claim was made — a circumstance that typically indicates ransom negotiations are continuing. Whether any data was ultimately compromised has not been publicly confirmed by the business.

It is also not publicly confirmed whether the attackers reached the company’s operational technology (OT) systems directly, or whether the shutdown of physical operations was caused indirectly by the encryption of IT systems that those physical processes depend upon.

About the Threat Group

The Gentlemen is a Ransomware-as-a-Service (RaaS) operation that emerged in approximately mid-2025 and has rapidly become one of the most prolific ransomware groups operating globally. Tracked by Microsoft under the designation Storm-2697, the group had claimed more than 580 victims across 77 countries by early July 2026, with 380 of those victims added in 2026 alone. That volume places it as the second most active ransomware operation in the world by published victim count as of that date.

Of the 580 victims claimed by the group, 103 operated within the manufacturing industry — a sector the group has specifically targeted given manufacturers’ low tolerance for operational downtime and the pressure that creates to resolve an incident quickly.

The group operates through an affiliate model, offering affiliates an unusually high 90% share of ransom payments to attract technically capable operators. Cybersecurity researchers have identified the group’s use of malware with worm-like lateral movement capabilities, meaning it can spread rapidly across connected systems once inside a network. The group has also been linked to a custom toolkit designed to disable endpoint detection and response (EDR) security software, complicating victims’ ability to contain an attack once it has commenced.

Why Food and Beverage Manufacturing Is a High-Value Target

This incident illustrates several characteristics that make food and beverage manufacturers — and manufacturers generally — particularly attractive targets for ransomware groups.

Operational downtime is immediately costly

Manufacturing businesses operate on tight production schedules, with seasonal peaks, perishable inputs, and contractual supply commitments. Shutting down even one facility for days has direct financial consequences that can be measured in lost production, spoilage, contract penalties, and reputational damage with buyers and supply chain partners.

IT and operational technology are increasingly interconnected

Modern food and beverage facilities rely on digital systems to manage everything from cane supply coordination and logistics scheduling to production planning and historian databases. When these IT systems are encrypted or disrupted, physical operations — even those not directly connected to a network — can be forced to stop because operators lose the visibility and data needed to run processes safely. Researchers have noted that in the Queensland incident, core enterprise and logistics platforms were compromised, forcing a physical shutdown without the attackers necessarily touching a single piece of industrial control equipment directly.

Supply chains multiply the impact

A cyberattack on one manufacturer doesn’t stay contained to that business. Growers, harvesters, transport operators, and downstream buyers are all affected when intake systems, scheduling tools, or logistics platforms go offline. This amplifies both the urgency to resolve the incident and the reputational exposure.

Seasonal timing can be exploited

This attack occurred at the beginning of a critical production season. The timing meant the business faced its most costly possible window of disruption — a pattern that cybercriminals are known to use deliberately to increase the pressure on victims to pay.

The Double Extortion Model

Modern ransomware attacks frequently involve what is known as “double extortion” — where attackers both encrypt the victim’s data and exfiltrate a copy of it before triggering the encryption. The victim is then threatened with publication of the stolen data if they don’t pay the ransom. This means the question of whether to pay goes beyond recovering access to systems — it also involves the risk of sensitive business information, customer data, or commercial contracts being published on the dark web.

For food manufacturers, exfiltrated data could include customer lists, supplier agreements, pricing structures, production data, and employee records. The consequences of that data being published extend well beyond the initial operational disruption.

What This Means for Your Cyber Insurance

Cyber insurance exists precisely to respond to incidents like this — but the coverage you have, and how well it responds, depends significantly on how your policy is structured and what controls you have in place. There are several insurance considerations that manufacturers should be actively reviewing in light of this type of incident.

Business interruption coverage

A manufacturing cyber policy should respond to the loss of revenue and additional costs incurred during a shutdown caused by a cyberattack. The scope of this coverage — how it’s triggered, what the waiting period is, and whether it extends to supply chain disruption — varies significantly between policies. If your production depends on digital scheduling, logistics, or inventory management systems, you should be confident that a disruption to those systems would trigger your business interruption cover.

Ransomware and extortion coverage

Most cyber policies include cover for ransomware payments and extortion demands, but the terms — including sublimits, approval requirements, and conditions around law enforcement engagement — need to be clearly understood before an incident occurs. Responding to a ransom demand under time pressure is not the moment to be reading your policy for the first time.

Data breach and notification costs

If data is exfiltrated in addition to systems being encrypted, the business may have obligations under the Privacy Act and the Notifiable Data Breaches scheme. Cyber policies typically cover the cost of forensic investigation, legal advice, and notification — but coverage limits and conditions vary.

Operational technology and industrial systems

Standard cyber policies can vary in how they treat claims arising from OT or industrial control system disruption, particularly where physical production processes are affected. Manufacturers should specifically confirm how their policy responds to cyber events that cause physical operational shutdowns.

Reputational and supply chain impact

The flow-on cost to supply chain partners and the reputational damage with buyers is rarely covered directly, but understanding where your policy’s boundaries are is important for understanding the total risk exposure your business carries.

What Businesses Can Do Now

While insurance is a critical component of cyber risk management, it works best alongside appropriate preventive measures. Cybersecurity researchers have identified several practical steps that manufacturing businesses can take to reduce their exposure to the type of attack seen in this incident.

Multi-factor authentication across all systems — particularly VPNs, remote access gateways, and email — reduces the risk of credential-based attacks, which remain one of the most common initial access methods for ransomware groups. Keeping systems patched and up to date addresses known vulnerabilities that groups like The Gentlemen are known to actively exploit. Maintaining tested, offline backups that are not connected to primary systems is the single most effective way to reduce the operational impact of a ransomware attack. Segmenting IT and OT networks reduces the risk that an attack on enterprise systems cascades into physical production processes.

These are the same controls that cyber insurers are increasingly assessing as part of their underwriting process, which means businesses that have invested in them are in a stronger position both to prevent an incident and to access coverage when they need it.

Getting the Right Advice

Cyber risk for manufacturers is not a simple product category, it sits at the intersection of business interruption, liability, regulatory obligation, and operational risk in ways that need to be carefully matched to how your business actually operates.

If you’d like to review your current cyber insurance arrangements in the context of incidents like this, or if you want to understand specifically how your policy would respond to a ransomware or operational shutdown event, Barrack Broking is available to help. Our team works with manufacturing clients nationally and understands the operational realities that make this sector’s risk profile distinctive.

*This article draws on publicly available information from cybersecurity research sources and published incident reporting. It does not constitute legal or technical cybersecurity advice. Businesses experiencing a cyber incident should engage a specialist incident response provider immediately.

The post Ransomware Hits Queensland Food Manufacturing: What the Sector Needs to Know appeared first on Barrack Broking.

A commercial insurance broker differs from an insurance company as they represent your business and serve as an advocate for your company in the event of a claim. A broker will provide tailored advice and solutions designed for your unique circumstances as a commercial enterprise to ensure you have the right protection in place.

With Barrack Broking, our team of experts work across Australia to advise on insurance solutions for your property assets, so you can rest assured that your business is taken care of if a claim arises. 

Barrack Broking is taking the mystery out of the world of insurance. 

What a Commercial Insurance Broker Actually Does

In simple terms, a commercial insurance broker will identify the unique risk profile of your business to ensure you have the adequate amount of coverage to protect you from those risks. 

When running a commercial enterprise, we know risks are inherent in your day-to-day operations. The scope of that risk depends on a number of factors relating to your business, such as: your business structure, the sector you operate in, and your annual turnover. 

That’s why Barrack Broking seeks to understand the ins and outs of your business, in order to offer practical solutions grounded in real-world application to ensure your company is set-up for long-term success.

Our team work through a four-step process when approaching commercial insurance:

1. Risk Assessment: We’ll start by understanding your business and scenario to identify your risks.
2. Policy Selection: We’ll develop a tailored strategy and program that is detailed with cost and your coverage options, using our market knowledge and expertise. 
3. Market Analysis: We’ll head out to the market to negotiate a policy with the right insurer that covers you based on the identified risks.
4. Ongoing Advocacy: We’ll be here for you all year round. Whether you need claim support, policy clarification or general advice, you can rely on Barrack Broking to support you. 

Insurance Broker vs Direct Insurer

Whose interests are represented?

Direct Insurer: The profits of the insurance company, every time.
Insurance Broker: The financial interests of your business.

Number of insurers compared

Direct Insurer: Limited to one, from their own policy shelf.
Insurance Broker: A comprehensive market comparison with multiple insurers.

Policy Wording Review

Direct Insurer: A take it or leave it approach.
Insurance Broker: Tailored clauses that are negotiated to your company’s needs.

Claims Support

Direct Insurer: Involves negotiating with their internal executives.
Insurance Broker: Your broker is your advocate throughout the claims process.

Renewal Advocacy

Direct Insurer: Automatic annual price increases
Insurance Broker: We go back to the market to ensure your premium remains competitive.

Industries and Risks We Cover

At Barrack Broking, we’re committed to providing you with expert advice and matching you to an insurance policy that works for you and your business, working across a variety of industries, including:

• Care and Community Sectors: Commercial protection for aged care providers and childcare operators customised to the unique risks of the care industry.
• Professional Services: Tailored professional indemnity and cyber insurance coverage for the professional sectors, including accountants and engineers.
• Property and Real Estate: Our commercial property insurance insurance experts provide comprehensive asset protection for commercial real estate portfolios. 

Where We Operate

Barrack Broking has specialists positioned around the country, ensuring you get essential local knowledge you need from your insurance broker.

From on-the-ground risk assessments to face-to-face support, we have dedicated teams across: Sunshine Coast, Newcastle, Melbourne, Toowoomba, Bundaberg, Adelaide, Brisbane, Cairns, Sydney and Gold Coast.

Frequently Asked Questions

What does a commercial insurance broker do for a small business? 

As a small business, you should see a broker as your outsourced risk manager. By outlining your unique exposures and sourcing the appropriate coverage to mitigate these exposures, your commercial insurance broker manages any claims on your behalf so you can focus on running your business. 

Is a broker more expensive than going direct?

Not necessarily. Brokers may charge an additional service fee or receive a commission from an insurer, but in the long-term they save your business more by preventing under-insurance. With insider market knowledge, they are well positioned to negotiate lower pricing while making sure any legitimate claims are paid out in full. 

Do you work as a commercial property insurance broker?

Yes. Barrack Broking are proud to offer commercial property insurance broking to an extensive portfolio of Australian businesses across a range of industries. To find out more, explore our Who We Help page.

The post What Does a Commercial Insurance Broker Do? appeared first on Barrack Broking.

At the same time, food production insurance is becoming a more important discussion for businesses operating across manufacturing and agribusiness sectors.

For many manufacturers and stockfeed producers, the issue is no longer simply whether insurance exists — it is whether existing cover still reflects the scale and complexity of the business today.

Operational changes often happen gradually. A business may introduce new product lines, expand warehousing, increase production capacity, or move into new distribution channels over time. Food production insurance programs do not always evolve alongside those operational changes.

That gap can become more noticeable when claims occur or insurers reassess risk.

Why Food Production Insurance Is Changing

Food manufacturing has always carried contamination and liability exposure, but insurers are now looking more closely at broader operational controls and supply chain risk.

Areas receiving greater attention include:

• traceability systems
• supplier verification
• product testing
• transport and storage conditions
• recall preparedness
• quality assurance processes

Part of this reflects how interconnected food supply chains have become. A single issue involving ingredients, packaging, labelling, or transport can quickly affect multiple businesses downstream.

Food production insurance is also becoming more heavily influenced by operational governance. Businesses with outdated procedures or limited operational documentation may find policy terms tightening over time, particularly where product recall exposure exists.

This is becoming more noticeable across businesses experiencing rapid growth or operational expansion.

Product Recall Exposure Is No Longer Just a Compliance Issue

Many businesses still think about recalls primarily as a regulatory event. In reality, recalls often become broader operational and commercial problems.

A contamination issue or labelling error can lead to:

• stock withdrawals
• customer notifications
• production delays
• contract disputes
• reputational pressure
• supply chain disruption

The direct cost of removing products from the market is often only one part of the impact.

What creates longer-term pressure is usually the disruption surrounding the event — retailer relationships, supplier confidence, customer trust, and production continuity.

Because of this, food production insurance discussions increasingly focus on how a business would respond operationally if an incident occurred.

Questions often include:

• Can products be traced quickly?
• Are supplier records maintained properly?
• Is there a documented recall process?
• How quickly can batches be isolated?
• Are third-party manufacturers monitored effectively?

Businesses involved in private label manufacturing or large-scale distribution arrangements are often seeing even closer scrutiny because the downstream exposure is broader.

Recent reporting from Food Standards Australia New Zealand continues to identify undeclared allergens and contamination among the leading causes of recalls in Australia.

What Stockfeed Manufacturers Should Be Reviewing

Stockfeed manufacturers face many of the same operational pressures, although the exposure can extend further into agricultural supply chains.

Cross-contamination remains a major concern, particularly where different feed products or additives are processed within shared environments.

A production issue affecting livestock health can create flow-on consequences involving:

• producers
• processors
• transport operators
• agricultural suppliers
• contractual partners

For insurers, operational controls become especially important in these environments.

Areas commonly reviewed include:

• ingredient sourcing
• contamination controls
• cleaning procedures
• batch testing
• transport conditions
• supplier management

Businesses introducing new formulations or increasing production volumes sometimes underestimate how much their exposure has changed over time.

This is one reason food production insurance should be reviewed regularly as operations evolve.

Why Insurance Structures Often Fall Behind Operations

One of the more common patterns across manufacturing businesses is that operational growth happens progressively while insurance arrangements remain largely unchanged.

A business that once operated from a single site may now have:

• multiple storage locations
• outsourced production
• interstate distribution
• export exposure
• automated systems
• larger contractual obligations

Each of those changes can alter risk in different ways.

Food production insurance should reflect how products are manufactured, stored, transported, and distributed in practice — not how the business operated several years ago.

This becomes particularly important when reviewing:

• product recall limits
• business interruption calculations
• stock values
• contract liability exposure
• machinery replacement costs
• cyber exposure linked to production systems

Manufacturing businesses are also becoming more reliant on digital systems across production, inventory, logistics, and administration. A cyber incident now has the potential to interrupt operations even where no physical damage has occurred.

What Insurers Are Looking for in 2026

Across food manufacturing and agribusiness sectors, insurers are placing greater emphasis on operational governance and risk management maturity.

This does not necessarily mean highly complex systems. In most cases, insurers simply want evidence that operational risks are understood and actively managed.

Areas commonly assessed include:

• HACCP compliance
• supplier governance
• incident response procedures
• business continuity planning
• cybersecurity controls
• maintenance processes
• quality assurance documentation

Businesses with stronger operational controls are generally in a better position during both underwriting and claims discussions.

As insurer expectations continue to evolve, many businesses are reassessing whether their food production insurance still reflects current operational realities.

Final Thoughts

Food production businesses operate within tightly connected supply chains where operational problems can escalate quickly.

As businesses grow or diversify, food production insurance programs do not always keep pace with those operational changes. Over time, that can create gaps that only become visible during a claim or insurer review.

For many food manufacturers and stockfeed producers, this is becoming a useful time to reassess whether existing insurance arrangements still properly reflect:

• how the business operates
• where liability may arise
• how products move through the supply chain
• how a recall event would be managed in practice

If your operations have changed significantly over recent years, it may be worth reviewing whether your food production insurance still aligns with how the business operates today.

Get in contact with the Barrack team here: https://www.barrack.com.au/

FAQs

What does food production insurance typically include?

Food production insurance can include public and product liability, property insurance, business interruption, machinery breakdown, product recall, cyber insurance, and transit cover.

The structure should reflect the operational realities of the business rather than relying on generic manufacturing policies.

Why is product recall insurance important?

Recall events often involve far more than damaged stock. Costs can include logistics, disposal, customer communication, crisis management, and production disruption.

The operational response to a recall can significantly influence the overall financial outcome.

Are stockfeed manufacturers exposed to product liability risk?

Yes. Contamination issues, formulation errors, or ingredient problems can create downstream exposure affecting livestock producers and supply chain partners.

This is why traceability and operational controls are important considerations for insurers.

The post Food Production Insurance: What Manufacturers and Stockfeed Producers Should Review appeared first on Barrack Broking.

Many buyers assume insurance only becomes relevant once settlement occurs. In practice, that is often too late.

Depending on the contract terms, state or territory, and type of property being purchased, insurance at exchange or settlement can become relevant well before settlement takes place.

That catches people off guard more often than you might think.

If a building is damaged between exchange and settlement, the purchaser may still be required to proceed with the transaction. For businesses acquiring commercial property, this can quickly become a significant financial issue if insurance arrangements have not been considered properly beforehand.

Insurance at Exchange or Settlement: Why Timing Matters 

The period between exchange and settlement can stretch for weeks or even months depending on the transaction. 

During that time, properties do not simply sit risk-free. 

Storms happen. Pipes burst. Fires occur. Tenants damage premises. Tradespeople are still coming and going. Vacant sites can become targets for vandalism or theft. 

The problem is that buyers often focus heavily on finance approval and settlement dates, while insurance is treated as something to organise later. 

This is where the issue of insurance at exchange or settlement becomes important. Depending on the contract, buyers may already carry the risk before settlement takes place. 

For commercial property, the exposure is rarely limited to the building alone. There may also be: 

• lease obligations  

• tenant income exposure  

• liability risks  

• fit-out considerations  

• lender requirements  

• contractor activity  

• operational interruptions tied to the property  

Insurance timing therefore becomes part of the broader transaction risk — not just an administrative step. 

Insurance at Exchange or Settlement Across Australian States and Territories 

Property risk relating to insurance at exchange or settlement does not transfer the same way in every Australian state and territory. Contract conditions still matter, but legislation and standard contract terms can also influence when responsibility moves from seller to buyer. 

For businesses purchasing commercial property across multiple jurisdictions, these differences are important to understand early. 

Queensland 

In Queensland, risk generally passes to the buyer from 5pm on the first business day after the contract date unless the contract states otherwise. 

This often surprises buyers, particularly where settlement periods are lengthy or where refurbishment works are planned before settlement. 

New South Wales 

In New South Wales, risk typically remains with the seller until completion unless the contract transfers risk earlier. 

Even so, many buyers still arrange insurance from exchange to avoid uncertainty during the settlement period. 

Victoria 

Victoria can create additional complexity because risk may pass to the purchaser earlier in certain circumstances. 

Commercial transactions can also involve specific contractual obligations around insurance, vacant possession, or property condition before settlement. 

Western Australia 

In Western Australia, risk commonly remains with the seller until settlement. However, buyers should still review contract wording carefully, particularly for commercial acquisitions involving tenants or operational sites. 

South Australia 

South Australian contracts generally leave risk with the seller until settlement unless otherwise agreed between the parties. 

Tasmania 

In Tasmania, contract conditions can vary significantly depending on the transaction structure, making early contract review important before exchange occurs. 

Australian Capital Territory 

ACT transactions are often governed through standard contract conditions and conveyancing arrangements, although commercial contracts may include additional insurance obligations. 

Northern Territory 

In the Northern Territory, risk positions can vary depending on both the contract and the property type involved. 

Because of these differences, buyers should avoid assuming insurance obligations are identical across jurisdictions. 

Commercial Property Purchases Usually Need an Earlier Insurance Review 

Commercial acquisitions tend to involve more moving parts than residential purchases. 

There may be existing tenants, maintenance obligations, refurbishment plans, vacant areas, or operational changes planned immediately after settlement. Some buyers are acquiring premises for their own business operations, while others are purchasing income-producing assets with ongoing lease arrangements already in place. 

Insurers look closely at these details. 

A vacant warehouse creates a different risk profile to a fully occupied office building. A childcare centre undergoing upgrades will be assessed differently to a standard retail tenancy. Older commercial properties can also raise issues around compliance, electrical systems, or rebuilding costs. 

This is why insurance discussions often need to happen earlier than buyers initially expect. 

The policy structure should reflect how the property will actually operate after settlement — not simply how it was insured by the previous owner. 

Businesses operating in specialised sectors are increasingly reviewing operational risks alongside property acquisitions. Our childcare insurance explores some of the broader insurance considerations affecting childcare operators and property owners.  

Why Leaving Insurance Until Settlement Can Create Problems 

In some transactions, insurance becomes a rushed exercise during the final stages of finance approval. 

That approach can create avoidable issues. 

Certain properties require additional underwriting information before insurers will confirm terms. This is particularly common for: 

• industrial facilities  

• hospitality venues  

• childcare operations  

• older buildings  

• vacant premises  

• specialised commercial sites  

Sometimes the problem is not availability of cover, but the time required to properly assess the risk. 

We are also seeing more situations where buyers discover declared building values no longer reflect realistic rebuilding costs. Construction inflation has changed replacement cost calculations considerably over the past few years, especially across commercial property. 

A property may appear adequately insured on paper while still being materially underinsured in a major loss scenario. 

That issue is becoming increasingly common during acquisitions. 

Insurance Should Be Part of the Due Diligence Process 

One of the mistakes businesses make is treating insurance as separate from the acquisition itself. 

In reality, purchasing a property changes much more than ownership. 

It can alter: 

• operational exposure  

• liability obligations  

• business interruption risk  

• revenue dependency  

• contractual responsibilities  

• staffing exposure  

• tenant relationships  

• lender requirements  

That is why many businesses now review insurance earlier as part of broader commercial due diligence. 

The goal is not simply to arrange a policy before settlement. It is to make sure the insurance program still reflects how the business and property will actually operate once the transaction is complete. 

Final Thoughts 

The question of insurance at exchange or settlement is not just a technicality within the contract process. 

Depending on the transaction structure and jurisdiction, buyers may assume property risk well before settlement formally occurs. For commercial property purchases, the issue often extends beyond the building itself into broader operational and financial exposure. 

Reviewing insurance early can help businesses identify gaps, avoid delays, and ensure the transaction reflects how the asset will actually be used moving forward. 

If your business is purchasing property, expanding into new premises, or reviewing a commercial acquisition, it may be worth reassessing whether your insurance arrangements still align with the operational realities of the business. 

Barrack Broking works with businesses across a range of industries to help ensure insurance structures reflect contractual obligations, operational changes, and evolving risk exposure. 

FAQs 

Should insurance begin at exchange or settlement? 

In many cases, buyers arrange insurance from exchange because contractual risk can transfer before settlement occurs. The exact timing depends on the contract and jurisdiction. 

Is the seller responsible for damage before settlement? 

Not always. Some contracts transfer responsibility to the purchaser after exchange, even if settlement has not yet occurred. 

Why do lenders ask for insurance before settlement? 

Lenders generally require confirmation that the property securing the loan is adequately insured before releasing funds. 

What insurance should commercial property buyers review? 

Depending on the property and operations involved, buyers may need to review: 

• property insurance  

• landlord insurance  

• public liability  

• business interruption  

• contract works  

• management liability  
• cyber and operational risks linked to the business  

The post Insurance at Exchange or Settlement? What Australian Property Buyers Should Understand in 2026 appeared first on Barrack Broking.

For many businesses in the sector, contractor liability is no longer just about maintaining a public liability policy. It increasingly involves reviewing how subcontractors are engaged, how responsibilities are documented, and whether insurance arrangements actually reflect how projects operate day to day. 

This is becoming particularly relevant as construction businesses navigate rising insolvencies, tighter margins, labour shortages and increased scrutiny around workplace safety and project governance. 

Many businesses are now reassessing contractor liability as part of broader operational and contractual risk management — not simply as an annual insurance renewal exercise. 

Why Contractor Liability Risk Is Becoming More Complex 

Construction projects often involve multiple parties operating under layered contractual arrangements. Principal contractors, subcontractors, consultants, labour hire providers and suppliers may all contribute to project delivery, but liability does not always fall neatly between them when something goes wrong. 

Where disputes arise, insurers and legal parties will typically examine: 

• contractual responsibilities  

• site supervision arrangements  

• subcontractor agreements  

• safety procedures  

• documentation standards  

• indemnity clauses  

• evidence of compliance obligations  

In practice, this means a liability claim can quickly expand beyond the original incident itself. 

Recent data from Safe Work Australia continues to show construction remains one of the highest-risk industries for workplace injuries and serious incidents, particularly involving falls, vehicles and mobile plant operations. 

At the same time, rising project pressure and contractor insolvencies are creating additional exposures around unfinished works, defective workmanship and uninsured subcontractors. 

For insurers, these trends are influencing how construction risks are assessed, priced and underwritten. 

Subcontractor Management Is Receiving Greater Scrutiny 

One of the more common issues emerging across construction claims involves gaps between subcontractor arrangements and actual site operations. 

Many businesses assume subcontractors maintain appropriate insurance, licensing and safety controls. However, claims often reveal: 

• expired certificates of currency  

• inadequate policy limits  

• excluded activities  

• uninsured subcontractors  

• unclear contractual liability  

• labour hire arrangements operating outside intended structures  

This becomes particularly important where principal contractors retain broad contractual obligations for site management or project delivery. 

Even where a subcontractor causes the original issue, the principal contractor may still face: 

• legal defence costs  

• contractual disputes  

• project delays  

• reputational damage  

• rectification obligations  

• recovery action between insurers  

In some cases, businesses discover too late that contractual indemnities are not supported by actual insurance coverage. 

This is one reason many construction businesses are reviewing contractor onboarding processes alongside insurance structures. 

Construction Insolvencies Are Changing Project Risk 

The sharp increase in construction insolvencies across Australia is also reshaping contractor liability exposure. 

According to recent industry reporting, construction continues to account for one of the largest shares of Australian company insolvencies. This creates flow-on risks across the project chain, particularly where subcontractors collapse during active works. 

Operationally, this may lead to: 

• incomplete or defective work  

• uninsured rectification exposure  

• disputes over responsibility  

• delays affecting downstream contractors  

• contractual recovery issues  

• project continuity problems  

From an insurance perspective, insolvency can complicate claims where responsibility becomes difficult to recover from the original contractor. 

This is particularly relevant for businesses relying heavily on smaller subcontractors operating under tight margins. 

Many organisations are now placing greater focus on: 

• financial due diligence  

• subcontractor vetting  

• insurance verification  

• contractual risk allocation  

• staged project reviews  

These discussions are increasingly sitting alongside broader risk management conversations rather than purely procurement decisions. 

Completed Operations and Defects Liability Are Often Underestimated 

Liability exposure does not necessarily end when construction work is completed. 

Completed operations claims and defect-related disputes can emerge years after practical completion, particularly where structural issues, water ingress, fire safety concerns or non-compliant materials are involved. 

In some cases, businesses discover: 

• policy periods have changed  

• insurers have exited the market  

• exclusions apply differently than expected  

• contractual liability exceeds policy coverage  

• subcontractors responsible for the work no longer operate  

Defect disputes can also involve multiple parties simultaneously, including builders, consultants, certifiers and subcontractors. 

This is why construction businesses are increasingly reviewing: 

• completed operations coverage  

• professional indemnity exposure  

• contract works structures  

• defect liability periods  

• document retention procedures  

• subcontractor insurance obligations  

These reviews are becoming particularly important for businesses operating across large commercial, mixed-use and infrastructure projects where claims may develop over extended periods. 

Contractual Liability Is Becoming More Important 

Insurance policies and contracts do not always align as closely as businesses assume. 

Many construction contracts now contain broad indemnity clauses, liquidated damages provisions and assumed liability obligations that extend beyond standard insurance protections. 

This can create situations where a business contractually accepts obligations that may not be fully covered under its liability policy. 

Areas that commonly create issues include: 

• fitness-for-purpose obligations  

• broad indemnities  

• waiver of subrogation requirements  

• hold harmless clauses  

• design responsibility assumptions  

• uninsured contractual penalties  

As projects become more complex, insurers are paying closer attention to contract wording during underwriting and claims assessment. 

For many businesses, reviewing insurance without reviewing contracts separately is becoming increasingly difficult. 

This is one reason contractor liability discussions are now involving operations teams, legal advisers, project managers and brokers together rather than operating in isolation. 

Insurers Are Looking More Closely at Risk Management 

Construction insurers are also becoming more selective around the types of contractor risks they are willing to support. 

Underwriters are increasingly assessing: 

• subcontractor controls  

• project governance  

• WHS systems  

• claims history  

• financial stability  

• quality assurance procedures  

• contract management frameworks  

Businesses with stronger operational controls are generally in a better position during renewal discussions and major project tenders. 

This is particularly relevant as some insurers continue reducing exposure to high-risk construction segments or applying tighter underwriting conditions. 

For businesses expanding into larger projects, civil works, infrastructure or specialist contracting activities, insurance programs may need to evolve alongside operational growth. 

Final Thoughts 

Contractor liability risk in construction projects is becoming broader than traditional site injury exposure alone. 

Contracts, subcontractor structures, insolvency pressure, completed operations exposure and insurer expectations are all influencing how liability is assessed across projects. 

As businesses grow or take on more complex work, insurance arrangements do not always evolve at the same pace as operational risk. 

Reviewing contractor liability exposure alongside contracts, project delivery models and subcontractor management processes is becoming an increasingly important part of broader construction risk planning. 

If your construction business has expanded, changed project types or adjusted subcontractor structures recently, it may be worth reviewing whether your insurance program still reflects how your projects operate today. 

Barrack Broking works with construction businesses across a range of project environments to help align insurance structures with operational and contractual realities. 

FAQs 

What is contractor liability insurance in construction? 

Contractor liability insurance generally refers to insurance covering third-party injury or property damage arising from construction activities. Depending on the business, this may involve public liability, products liability, contract works and other project-specific covers. 

Why are subcontractor insurance arrangements important? 

Principal contractors may still face liability exposure even where subcontractors perform the work. Inadequate subcontractor insurance or poorly drafted agreements can create recovery and claims issues during disputes. 

Does liability exposure end after a project is completed? 

Not always. Completed operations and defect-related claims can emerge years after construction work is finalised, particularly where structural issues or compliance concerns arise later. 

Why are insurers becoming stricter on construction risks? 

Construction claims inflation, insolvencies, defect disputes and workplace safety exposure have all contributed to tighter underwriting conditions across parts of the construction sector. 

The post Contractor Liability Risks in Construction Projects: What Businesses Should Review appeared first on Barrack Broking.

For many businesses, the issue has not come from major operational changes or large property acquisitions. Instead, it has developed gradually through rising construction costs, inflation, labour shortages, compliance changes, and shifting insurer expectations. 

A building insured five years ago may now cost substantially more to rebuild. In some cases, even policies reviewed annually may no longer reflect current replacement values. 

This matters because underinsurance often only becomes visible at claim time — particularly after major fire, storm, flood, or catastrophe losses. By then, the financial gap can be significant. 

For commercial property owners, landlords, strata operators, and businesses with physical assets, underinsurance is becoming part of broader risk and financial planning discussions rather than simply an insurance administration issue.

What Underinsurance Actually Means 

Underinsurance occurs when the insured value of a property is lower than the actual cost to rebuild or replace it. 

Importantly, this is not just about the market value of the building. Insurers assess rebuilding costs differently. A proper replacement value may also include: 

• demolition and debris removal  

• professional fees  

• compliance upgrades  

• escalation in material and labour costs  

• site access complications  

• tenant fit-outs or specialised infrastructure  

• business interruption exposure during rebuild periods  

Many businesses underestimate these additional costs. 

Recent commentary across the Australian insurance and construction sectors continues to point to rising replacement cost pressures. The Insurance Council of Australia reported that average residential construction costs increased materially between 2019 and 2024, with commercial rebuilding costs facing similar inflationary pressure.  

At the same time, insurers and loss adjusters are continuing to report elevated claims inflation linked to labour shortages, supply chain disruptions, and catastrophe repair demand.  

Why The Problem Is Growing In Commercial Property 

Construction Costs Have Changed Faster Than Many Policies 

One of the biggest drivers of underinsurance is that rebuilding costs have moved faster than many insured values. 

During the past several years, commercial construction costs have been affected by: 

• labour shortages  

• higher material costs  

• infrastructure demand  

• supply chain delays  

• increased contractor pricing  

• natural catastrophe repair demand  

Several industry reports suggest building costs in Australia have risen close to 30% since 2019.  

For commercial property owners, this creates a simple issue: insured values that were reasonable several years ago may no longer reflect current rebuild realities. 

This is particularly relevant for: 

• warehouses  

• industrial facilities  

• strata buildings  

• hospitality venues  

• older commercial buildings  

• properties with specialised fit-outs  

• regional or catastrophe-exposed locations  

Compliance And Building Standards Continue To Shift 

Another issue often overlooked is compliance upgrades following a major loss. 

Rebuilding today may require compliance with updated building codes, fire protection standards, accessibility requirements, energy efficiency rules, or council conditions that did not exist when the property was originally constructed. 

These additional costs can materially change the rebuild figure. 

Many businesses focus only on base construction replacement costs and overlook how regulatory requirements can influence claim outcomes. 

The Average Clause Is Often Misunderstood 

One of the more difficult aspects of underinsurance is the “average clause” included in many commercial property policies. 

If a property is significantly underinsured, insurers may reduce the claim payout proportionally — even for partial losses. 

For example, if a building should have been insured for $10 million but was only insured for $7 million, the insurer may only pay 70% of certain claim costs. 

This can create substantial out-of-pocket exposure for property owners during already difficult operational periods. 

Many commercial property owners are not fully aware of how these clauses operate until a claim occurs. 

Business Interruption Is Also Becoming More Exposed 

Underinsurance discussions are no longer limited to physical buildings. 

Business interruption calculations are becoming increasingly important, particularly as rebuild periods extend. 

Labour shortages, permit delays, supply chain disruption, and contractor availability can significantly increase recovery timeframes following major losses. 

In practice, many businesses discover their indemnity periods are too short or their declared gross profit calculations no longer reflect current operations. 

For landlords and commercial property investors, delayed tenant reoccupation can also create prolonged rental income disruption. 

This is becoming particularly relevant in sectors such as: 

• hospitality  

• manufacturing  

• retail  

• healthcare  

• industrial operations  

• mixed-use developments  

Natural Catastrophe Exposure Is Increasing Pressure 

Climate and catastrophe exposure are also influencing underinsurance risk. 

Properties exposed to flood, cyclone, bushfire, or storm activity are seeing ongoing insurer scrutiny around rebuilding assumptions, valuations, and risk engineering controls. 

Recent APRA commentary has also highlighted broader concerns around insurance affordability, catastrophe exposure, and the growing financial risks associated with uninsured or underinsured property assets.  

For commercial property owners, this means insurers are increasingly focused on: 

• accurate declared values  

• property condition  

• maintenance standards  

• catastrophe mitigation  

• construction type  

• occupancy exposure  

• tenant activities  

As underwriting becomes more detailed, outdated sums insured are attracting greater attention. 

Why Annual CPI Increases Are Not Always Enough 

Some businesses assume automatic annual inflation adjustments solve the issue. 

In reality, standard CPI increases may not fully reflect actual commercial rebuilding conditions. 

Construction inflation can move differently to broader economic inflation — especially during periods of labour shortages or catastrophe-related demand spikes. 

That is why insurers, valuers, and brokers are increasingly encouraging formal replacement cost valuations rather than relying solely on indexed increases. 

This is particularly important for higher-value or specialised properties where rebuilding complexity materially affects costs. 

What Commercial Property Owners Should Review 

For many organisations, underinsurance is less about one incorrect figure and more about policies not evolving alongside the business itself. 

Areas worth reviewing include: 

Building Sums Insured 

Do current values reflect realistic rebuild costs today? 

Professional Valuations 

When was the last formal insurance valuation completed? 

Business Interruption Periods 

Would the indemnity period realistically cover rebuild and recovery timeframes? 

Tenant Improvements And Fit-Outs 

Have renovations, upgrades, or occupancy changes been reflected properly? 

Compliance Exposure 

Would rebuilding trigger updated code requirements? 

Catastrophe Exposure 

Has flood, cyclone, or bushfire exposure changed insurer expectations? 

These conversations are increasingly becoming part of broader operational and financial risk management rather than simply annual renewals. 

As noted in Barrack’s recent article on rebuild cost pressures, many businesses are discovering that insured values can fall behind operational reality surprisingly quickly.  

Final Thoughts 

Underinsurance is becoming a bigger issue because the cost and complexity of recovery have changed. 

Construction inflation, compliance obligations, catastrophe exposure, and longer rebuild timeframes are all influencing how insurers assess commercial property risk. 

For many property owners, the challenge is not whether they have insurance — it is whether the policy still reflects the real cost of recovery if a serious loss occurs. 

If your property portfolio, operations, or rebuilding costs have changed over recent years, it may be worth reviewing whether your insurance program still reflects current exposures. 

Barrack Broking can help review commercial property insurance structures, declared values, and broader risk considerations to ensure policies remain aligned with how businesses operate today. 

The post Why Underinsurance Is Becoming a Bigger Issue for Commercial Property Owners appeared first on Barrack Broking.

That is not really the case anymore. 

Over the last couple of years, recalls have become more common across a broader range of industries in Australia — particularly where products move through layered supply chains, outsourced manufacturing arrangements, or imported component networks. 

In some sectors, the issue is not necessarily that products are becoming less reliable. It is that regulators, retailers, insurers, and consumers now expect businesses to identify and respond to issues much faster than they once did. 

That changes the exposure considerably. 

A product issue that may once have remained relatively contained can now create operational disruption very quickly. Retailers may suspend stock. Customers may share incidents publicly before investigations are complete. Regulators may require formal notification. Insurers may request detailed documentation around testing, traceability, and supplier controls. 

For manufacturers, importers, and distributors, product recalls are increasingly being viewed as broader business events rather than isolated compliance problems. 

In practice, the businesses that manage these situations best are often the ones that already understand their products, suppliers, contracts, and internal processes in detail before an issue occurs.

Why Product Recall Exposure Is Receiving More Attention 

Manufacturing and distribution models have changed considerably over the past decade. 

Many Australian businesses now operate with some combination of outsourced production, imported materials, third-party logistics providers, contract manufacturers, and offshore suppliers. Those arrangements often make commercial sense, but they can also reduce visibility across the production chain. 

That becomes more relevant when defects, contamination issues, or product safety concerns emerge. 

The Australian Competition and Consumer Commission has continued focusing on areas such as lithium-ion battery safety, unsafe imported goods, and compliance with mandatory safety standards. Businesses involved in batteries, electronics, consumer goods, charging equipment, or imported products have been paying particularly close attention. 

What makes recalls difficult is not always the original issue itself. 

Often, it is the response. 

Once products have moved through retailers, warehouses, distributors, online marketplaces, or customer networks, businesses may need to work backwards quickly to determine exactly what was affected, where products were sent, and whether additional stock remains in circulation. 

That process can involve regulators, retailers, freight providers, laboratories, legal advisers, insurers, and customer support teams all at the same time. 

Businesses with strong documentation and traceability procedures are usually in a much better position operationally than businesses relying on fragmented systems or informal processes. 

The Financial Impact Is Usually Broader Than Businesses Expect 

One issue that catches many businesses off guard is how quickly product recall costs extend beyond the physical product itself. 

The direct value of the affected stock is often only one part of the exposure. 

Depending on the circumstances, businesses may also be dealing with freight costs, testing expenses, disposal arrangements, customer communication, replacement stock, temporary production delays, or contractual disputes with suppliers and retailers. 

For food manufacturers, there can also be additional pressure around contamination concerns, allergen declarations, or labelling issues. 

Recent reporting from Food Standards Australia New Zealand continues to show undeclared allergens and contamination among the leading causes of recalls locally. 

Importantly, many recalls do not start with catastrophic product failures. 

Sometimes the issue is relatively procedural. 

Incorrect labelling, supplier inconsistencies, handling errors, packaging problems, or quality control gaps can all create situations where businesses are forced to act quickly. 

That is one reason recalls are now being discussed more frequently as part of operational risk management and governance conversations rather than purely insurance conversations. 

Insurance Does Not Always Respond the Way Businesses Expect 

One of the more difficult parts of product recall exposure is that businesses often assume their existing liability policies will automatically respond to the broader costs involved. 

That is not always how claims play out. 

A standard product liability policy will generally focus on third-party injury or property damage arising from a defective product. The costs associated with physically recalling products, communicating with customers, disposing of stock, or replacing inventory may sit outside that response depending on the wording involved. 

This is where businesses sometimes discover there is a difference between having liability coverage and having dedicated recall protection. 

Even then, recall policies themselves can vary materially. 

Some provide broader crisis management support and first-party cost coverage. Others are narrower and rely heavily on how the trigger is defined. The detail matters more than many businesses initially expect. 

From an underwriting perspective, insurers are also looking more closely at how manufacturers manage operational controls internally. 

Questions around supplier governance, testing procedures, quality assurance frameworks, and traceability systems are becoming more common during renewal discussions. 

Businesses with mature internal processes are often viewed differently from businesses operating with limited oversight or inconsistent documentation. 

That trend is not limited to recalls either. Across commercial insurance generally, insurers are placing more weight on operational visibility and governance rather than simply relying on broad industry classifications. 

Traceability Has Become a Much Bigger Issue 

For businesses operating across multiple suppliers or importing products from overseas manufacturers, traceability is becoming harder to ignore. 

If an issue emerges, businesses may need to isolate affected batches quickly, determine where products were distributed, identify which supplier was involved, and understand whether products are still sitting with retailers or customers. 

That sounds straightforward in theory, but in practice it can become difficult where systems have developed gradually over time or where different suppliers operate across separate platforms and standards. 

Businesses with strong batch tracking and documentation processes are usually able to narrow the scope of product recalls far more effectively. 

Where visibility is poor, recalls can expand unnecessarily because businesses cannot confidently isolate what is actually affected. 

That creates additional cost, disruption, and reputational pressure. 

Insurers are paying attention to this. 

It is now fairly common for underwriters to ask businesses about supplier controls, testing standards, product certification, incident escalation procedures, warehousing arrangements, and quality assurance systems during the placement process. 

For manufacturers that have grown quickly or changed supply chain structures over recent years, these conversations are becoming more detailed than they were historically. 

Areas Manufacturers Are Reviewing More Closely 

Different industries obviously face different recall exposures, but there are a few areas many manufacturers are revisiting at the moment. 

One is supplier contracts. 

Where products are sourced internationally or manufacturing is outsourced, businesses are paying closer attention to how liability is allocated contractually between suppliers, distributors, importers, and retailers. 

Another area is recall planning itself. 

Some organisations have formal procedures in place but have never really tested how those procedures would operate under time pressure. Others have processes that evolved informally over time without much review. 

Businesses are also reviewing how different insurance policies interact during a recall event. 

Product liability, recall coverage, marine transit, cyber exposure, and business interruption can all overlap in ways that are not always obvious until a claim occurs. 

Retailer requirements are becoming another factor. 

Larger retailers and distribution partners are increasingly imposing stricter contractual obligations around notification timeframes, product safety obligations, testing standards, and indemnity provisions. 

For some businesses, those obligations are now influencing operational decisions well beyond insurance purchasing. 

Product Recall Preparedness Is Starting To Sit Inside Broader Governance Discussions 

For many businesses, product recalls are no longer being viewed purely as technical compliance issues. 

They are becoming part of wider conversations around operational resilience, supplier oversight, governance expectations, and stakeholder confidence. 

That shift is partly being driven by regulators and partly by insurers. 

Recent product safety priorities identified by the Australian Competition and Consumer Commission continue to place attention on imported product safety, lithium-ion battery risks, and compliance with mandatory standards. 

At the same time, insurers are increasingly looking at how businesses operate in practice — particularly where products move across multiple suppliers, jurisdictions, and distribution channels. 

For manufacturers that have expanded, diversified product lines, or changed supply chain structures over recent years, there is often value in reviewing whether existing insurance arrangements and operational procedures still reflect the way the business actually operates today. 

Barrack Broking works with manufacturers across a range of industries to help align insurance structures with operational realities, contractual obligations, and evolving insurer expectations. 

The post Product Recall Risk in Australia: What Manufacturers Should Review in 2026 appeared first on Barrack Broking.