Today, there are more types of coverage for more types of risk. When choosing the right protection, small businesses find there’s no substitute for the advice of a licensed, experienced insurance counselor.

SMALL BUSINESS AND INDEPENDENT AGENTS

Indispensable coverage partners after all these years

By Joseph S. Harrington, CPCU

Blog postings are supposed to be original thoughts, but sometimes there’s no better way to say something than how it was first expressed. In their 2020 Small Business Risk Report, based on a nationwide survey of enterprises, The Hanover and Forbes Insights come to some very gratifying conclusions for independent agents and brokers. According to the report, small businesses are:

• “Taking more interest than ever in their business insurance policies;”
• “Recognizing that the quality of coverage is more important than price;” and
• “Turning to the expertise of an independent agent to make more informed purchase decisions.”

According to the report, only 2% of those surveyed said that they bought their insurance over the internet. So much for the disruption of independent agency distribution by online portals (although efficient online service for producers and buyers is a must for successful carriers).

While The Hanover results reflect only one survey, it is not at all surprising that small businesses would find more, rather than less, value today in using independent insurance producers. The single greatest consideration in small business risk management today is the rapid growth in the range of exposures they face, and the insurance products available to address them.

[T]he report finds that “breadth of coverage” is the leading priority of small business buyers, while “price” ranked fourth among their concerns, behind a carrier’s reputation and the agent’s recommendation.

As recently as the year 2000, it was considered adequate to insure small and mid-sized enterprises with a businessowners or simple commercial package policy, plus commercial auto, workers comp, and professional liability coverage when needed. Today, it is hard to imagine any enterprise that does not have some degree of cyber exposure, and pressure from business partners to have cyber insurance, which comes in a variety of formats.

Beyond that, The Hanover report notes that almost a quarter of respondents reported some degree of vulnerability to employment claims for harassment, discrimination, and wrongful termination; nearly one-third sponsor events that expand liability exposure; and more than 40% provide advice, consulting services, and training that create professional liability exposure.

In short, there are more types of coverage for more types of risk.

When it comes time for choosing the right protection from among myriad rapidly evolving options, small businesses apparently find that there is no substitute for the advice of a licensed, experienced insurance counselor. A web portal can be useful, but it may not suggest what you haven’t thought of, and it cannot be accountable for an oversight.

Perhaps most gratifying to carriers and producers alike, the report finds that “breadth of coverage” is the leading priority of small business buyers, while “price” ranked fourth among their concerns, behind a carrier’s reputation and the agent’s recommendation. Coverage was emphasized over price even though 20% of respondents reported premium increases in 2019 that exceeded 5% in all three of the businessowners, commercial auto, and workers comp lines.

In all, 72% of those surveyed by The Hanover reported that the advice of an agent is critical to their insurance decisions. Whatever else develops, the confidence they’ve earned in the past point to a bright future for independent agents and brokers.