Small businesses in Queensland say they can no longer afford insurance premiums for security guards and fear patron safety is at risk.

Paul Bonello has owned his security business in Mackay for more than 15 years and has never made a claim.

But he said he was now unable to get affordable public liability insurance and had stopped staffing nightclubs.

"We've tried about 20 to 30 different brokers, insurance brokers, and no-one is insuring nightclubs," he said.

"There was one, maybe two insurers that can insure us, but they want $100,000 excess just to put a claim in and that's non-refundable.

Mr Bonelllo is the only security service provider in Mackay and can no longer afford to provide security for two nightclubs in the city.

Tenielle De Thomasis from Mojo's, one of the venues that used Mr Bonello's security guards, said the safety of staff and patrons could be compromised.

"It's pretty scary," Ms De Thomasis said.

"People are unpredictable these days and there's no way that you'd let staff work without any type of security."

A change of heart

Member for Mirani Stephen Andrew has raised the issue in state parliament with concerns about the flow-on effect on the entertainment and hospitality sectors. 

"[Insurance underwriters] Lloyds of London have adapted and changed their risk appetite — no explanation, statistics, or data has been given to explain this," he told the lower house.

"They [the security companies] have basically been pushed out of the market."

Mr Bonello said he only became aware of the change when he went to renew his policy.

"They didn't give us any notice … we actually got in early. It wasn't due until June 5 and we wanted to get it sorted by tax time," he said.

"They came back to us and said that we can't get insurance for nightclubs."

He said it would be an issue facing companies around the country.

But it's not just security companies that are struggling with insurance costs.

Tim Langford from Paddy's Shenanigans in Airlie Beach said his public liability premium had doubled since COVID.

"The problem I have is that I'm a live entertainment venue, but I have to operate on a nightclub licence," he said.

Mr Bonello said it would mean some businesses might have to stop operating, with it too risky to continue without insurance.

"If someone gets hurt who comes back on us, we could lose the business, lose all the hard work we've done over 15 to 17 years," he said.

Public safety risk

Mr Bonello said he was worried that clubs might be forced to use untrained, in-house staff to provide the services companies like his used to.

"There's a reason there's training and licensing for security," he said.

"There'll be a lot more fights. I just don't know how [liquor] licensing is going to police it because a lot of places have to have licensed guards on."

Mr Langford said he was also concerned about safety.

"Patrons will be less secure because there's less security," he said.

Mr Langford said taking security in-house was not a viable option as it would be a "compliance nightmare".

Ms De Thomasis said she feared some places would be forced to close.

"There's no doubt in my mind unless they have the option of having in-house guards," she said.

"But they'd have to train them up, put them through the course, which I'm told can take 80 hours."

What can be done?

Those within parliament and the hospitality sector are unsure how the problem can be solved.

Mr Andrew said there was no easy policy fix.

"If the underwriter doesn't want to accept the risk, someone's got to pay the price and this is the situation that you have," Mr Andrew said.

"We've had lockdowns for two years and to add insult to injury we've got extremely high costs and people not wanting to insure certain businesses.

Mr Langford said the situation could have a significant impact on a place like Airlie Beach, popular with tourists as a party town.

"It's one of the major incomes in town, they're either employed by hospitality or tourism," he said.

"If they didn't exist, half the people here wouldn't have work.

"It's pretty much the fabric of the town."