To say the past few years have been eventful for businesses would be a gross understatement. Companies have faced a very challenging environment, from the pandemic to a wide variety of social and political changes. More recently, businesses, like consumers, have had to contend with rapidly rising inflation.
Nowhere has the sum of these issues been felt more acutely than in the business insurance industry, which exists to help companies reduce their financial risks. That’s easier said than done when businesses are forced to adapt on the fly to a whole host of difficulties.
Why Insurance Is Vital to Small Businesses
Most small business owners are aware that small business insurance exists. However, not all recognize how critically important it is to maintain adequate coverage.
Unfortunately, one significant incident can dramatically affect a business’s financial stability. Take slip-and-fall accidents, for instance. They’re an incident that happens all the time at companies around the U.S. and probably the most frequently cited example of where small business insurance can provide crucial protection.
A customer walks into your place of business, slips on the wet floor, and breaks their wrist. You immediately render aid, the customer heads to a hospital to get the broken bone treated, and you consider your role in the incident complete. But before long, you receive notice that the customer is suing your business for the cost of their treatment plus various other expenses like time away from work and “pain and suffering.” The suit seeks $35,000 in total damages.
If the court rules in the plaintiff’s favor, your business must pay that amount. And if you don’t have small business coverage like general liability insurance to cover it, your company will have to come up with that sum.
That is, of course, just one example of the many types of liability a company faces. People might also sue your business over accidents involving company-owned or leased vehicles, mistakes in the professional advice or services you provide, property damage caused by your employees, etc.
Then there are costs not related to lawsuits that must be covered, such as treatment for employee injuries, repairs or asset replacement after storm damage, and so on. In short… Small businesses have a vested interest in the availability of affordable coverage and the health of the insurance companies that provide it.
Premium Growth As a Measure of Business Insurance Industry Health
One way to gauge the health of the business insurance industry is by tracking insurance premiums. Unsurprisingly, as management consulting firm McKinsey & Company reports in its Global Insurance Report 2022, premium growth slowed considerably in 2020.
That may seem like an advantage for businesses, and perhaps in the short term, it was. But, as noted above, the small business insurance industry moves in sync with the companies it insures. So, little to no premium growth isn’t a good sign for anyone involved. Fortunately, premium growth rebounded in 2021 as small businesses rallied to meet increasing customer demand.
What’s Ahead for the Insurance Industry and Its Customers?
With the world having a better handle on COVID-19 today, that challenge seems to be decreasing in importance somewhat. However, like Deloitte, a leading audit, consulting, and advisory company, notes in its outlook for the months ahead, “the ride could be bumpy.”
Businesses continue to face many significant challenges. They include:
- Attracting and retaining top talent
- Implementing new technologies while still providing excellent personal service
- Coping with high inflation
- Finding their hybrid work environment “sweet spot”
- Contending with societal issues like diversity, sustainability, and others.
Most companies must tackle all of these issues and many more while trying to recover from losses—in revenue, market share, workforce, etc.—in 2020. That makes the challenge even more formidable.
Small Business Insurance: Calm in a Chaotic World
What will happen in the remainder of 2022 and beyond? There are hints of better times on the horizon, but nobody can say for sure.
However, business owners will tell you that having adequate insurance from a reputable provider that has stood the test of time takes one item off their to-do list and one concern off their mind. Knowing that their company has financial protection should the unexpected occur helps them sleep much better at night.
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