Business Insurance
• The most frequent insurance coverages small-business owners possess are property damage, workers’ compensation, and premise liability (covering slips and falls, etc.). Owners reported that the median spent on insurance including workers’ and unemployment compensation is 7 percent of gross sales.
• Fifteen (15) percent reported that they do not “purchase” business insurance. It is not clear how many in this group rely on personal coverage and how many are uncovered.
• Sixty-four (64) percent of small employers identified the greatest current problem with business insurance as rising premium costs. All other business insurance problems pale in comparison. In fact, the second most frequent response (15%) was that there are no real current problems with business insurance.
• Premium costs are rising most rapidly for employee health insurance. Of the 52 percent who offer employee health insurance, nine of ten (90%) reported premium increases within the last year. Other coverages identified as having particularly high premium growth are workers’ compensation, product or professional liability including errors and omissions and negligence, vehicle collision and liability, and property damage.
• Once insured, small employers infrequently drop a coverage.
• Small-business owners have taken or will take a variety of steps in response to the largest premium increase received in the last year (among the nine insurance coverages evaluated). The most frequent response is changing insurers (34%), followed by increasing deductibles (30%), changing agents or brokers (25%), changing business operations to reduce claims risk (18%), and reducing or eliminating coverage (17%). About one-third (32%) who identified employee health as their most rapidly rising premium cost indicated that they did or would raise their employees’ cost share. Still, 48 percent who purchase insurance did not take (or plan) any counter-measures.
• Claims resolution does not appear to be a common problem. Only 2 percent said claims resolution is their greatest current problem with business insurance. The overwhelming majority who has experienced claims in the last year reported that they either were “very satisfied” or “generally satisfied” with their resolution.
• Thirty-three (33) percent claimed to carry extra life insurance on themselves for the sole purpose of paying any potential estate and gift tax.
• Just 11 percent of small-business owners consider themselves “very knowledgeable” about business insurance and their firm’s insurance needs. Another 60 percent consider themselves “somewhat knowledgeable.”
• Seventy-three (73) percent said that they have one person whom they would call, “my insurance agent.” Of that number, 49 percent consider “my agent” as their primary source of information on business insurance and the firm’s insurance needs while another 31 percent consider that individual an important source.
