Business Insurance

1. 1

   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.

2. 2

   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.

3. 3

   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.

4. 4

   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.

5. 5

   Once insured, small employers infrequently drop a coverage.

6. 6

   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.

7. 7

   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.

8. 8

   Thirty-three (33) percent claimed to carry extra life insurance on themselves for the sole purpose of paying any potential estate and gift tax.

9. 9

   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.”

10. 10

    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.

Volume 2, Issue 7, 2002
ISSN 1534-8326

William J. Dennis, Jr.
NFIB Research Foundation

• 1Overall, do you believe that the biggest problem with business insurance today is:? Top 100
• 4For which ONE type of insurance has the cost per unit gone up the most in the last year or two? Top 100
• 9Do you have one person whom you would call, “my insurance agent?” Top 100
• 2Do you buy business insurance, self-insure, or both buy and self-insure?
• 3A(business insurance coverage) Property damage.
• 3A1On a cost per unit of coverage basis, has the price of insurance covering property damage over the last year or so:? By what percentage has the price risen for property damage coverage?
• 3A2In the last year, have you filed one or more claims for $1,000 or more on insurance covering property damage?
• 3A3Did you drop coverage for property damage in the last three years, OR have you not purchased it in the last three years?
• 3B(business insurance coverage) Product or professional liability, including negligence, and errors and omissions.
• 3B1On a cost per unit of coverage basis, has the price of insurance covering product or professional liability over the last year or so:? By what percentage has the price risen for product or professional liability coverage?
• 3B2In the last year, have you filed one or more claims for $1,000 or more on insurance covering product or professional liability?
• 3B3Did you drop coverage for product or professional liability in the last three years, OR have you not purchased it in the last three years?
• 3C(business insurance coverage) Business interruption.
• 3C1On a cost per unit of coverage basis, has the price of insurance covering business interruption over the last year or so:? By what percentage has the price risen for business interruption coverage?
• 3C2In the last year, have you filed one or more claims for $1,000 or more on insurance covering business interruption?
• 3C3Did you drop coverage for business interruption in the last three years, OR have you not purchased it in the last three years?
• 3D(business insurance coverage) Environmental liability.
• 3D1On a cost per unit of coverage basis, has the price of insurance covering environmental liability over the last year or so:? By what percentage has the price risen for environmental liability coverage?
• 3D2In the last year, have you filed one or more claims for $1,000 or more on insurance covering environmental liability?
• 3D3Did you drop coverage for environmental liability in the last three years, OR have you not purchased it in the last three years?
• 3E(business insurance coverage) Employee health.
• 3E1On a cost per unit of coverage basis, has the price of insurance covering employee health over the last year or so:? By what percentage has the price risen for employee health coverage?
• 3E2Did you drop coverage for employee health in the last three years, OR have you not purchased it in the last three years?
• 3F(business insurance coverage) Slips and falls, and similar liability claims (premise liability).
• 3F1On a cost per unit of coverage basis, has the price of insurance covering slips and falls over the last year or so:? By what percentage has the price risen for premise liability coverage?
• 3F2In the last year, have you filed one or more claims for $1,000 or more on insurance covering slips and falls?
• 3F3Did you drop coverage for slips and falls in the last three years, OR have you not purchased it in the last three years?
• 3G(business insurance coverage) Vehicle collision and liability.
• 3G1On a cost per unit of coverage basis, has the price of insurance covering vehicle collision and liability over the last year or so:? By what percentage has the price risen for vehicle collision and liability coverage?
• 3G2In the last year, have you filed one or more claims for $1,000 or more on insurance covering vehicle collision and liability?
• 3G3Did you drop coverage for vehicle collision and liability in the last three years, OR have you not purchased it in the last three years?
• 3G2aHow satisfied were you with the insurance company’s response? Were you very satisfied, generally satisfied, not too satisfied, or not at all satisfied?
• 3H(business insurance coverage) Employment-related liability such as defamation or wrongful termination
• 3H1On a cost per unit of coverage basis, has the price of insurance covering employment-related liability over the last year or so:? By what percentage has the price risen for employment-related liability coverage?
• 3H2In the last year, have you filed one or more claims for $1,000 or more on insurance covering employment-related liability?
• 3H3Did you drop coverage for employment-related liability in the last three years, OR have you not purchased it in the last three years?
• 3I(business insurance coverage) Workers’ Compensation
• 3I1On a cost per unit of coverage basis, has the price of insurance covering workers’ compensation over the last year or so:? By what percentage has the price risen for workers' compensation coverage?
• 3I2In the last year, have you filed one or more claims for $1,000 or more on insurance covering workers’ compensation?
• 3I3Did you drop coverage for workers’ compensation in the last three years, OR have you not purchased it in the last three years?
• 3I2aHow satisfied were you with the insurance company’s response? Were you very satisfied, generally satisfied, not too satisfied, or not at all satisfied?
• 5A(response to premium increases) Change insurers.
• 5B(response to premium increases) Increase the deductible.
• 5C(response to premium increases) Reduce or eliminate this coverage.
• 5D(response to premium increases) Change agent or broker.
• 5E(response to premium increases) Change business operations to reduce claim risk.
• 5F(response to premium increases) Increase employee cost-share.
• 6Do you carry extra life insurance on yourself for the sole purpose of paying any potential estate and/or gift tax on your business?
• 7How much do you estimate that you spend per year on insurance of ALL types as a percentage of total sales? Include workers' and unemployment compensation.
• 8Do you consider yourself very knowledgeable, somewhat knowledgeable, not too knowledgeable, or not at all knowledgeable about business insurance?
• 9aIs that person your primary source, an important source, a modestly important source, or not an important source of business insurance and your firm’s insurance needs?