As the insurance landscape for small business owners has changed, so should the partners who support them. Introducing Bold Penguin’s new, six-part educational series on evolving risks.
Bold Penguin’s new, six-part educational series on small business risk management, The Evolving Risks Of Small Businesses, seeks to help insurance brokers and agents navigate the demands of a continually changing commercial insurance marketplace.
Each piece in the series will provide guidance on how to navigate these small business risk management issues to achieve success, highlighting insights from our partners and leveraging those that our position in the marketplace provides. As a valued partner of agents, brokers, and carriers, Bold Penguin has a 360-degree view of the industry. So it was a natural step to do this deep dive into the evolution we are seeing in the marketplace to drive our partners’ growth.
The price of policy premiums continues to increase. Inflation is the primary causal factor in this rise. The cost of skilled labor and materials has also significantly spiked in recent years, so carriers are increasing their premiums to cover these costs.
We are experiencing a hard market in the insurance industry, which also drives the price of premiums. Coverage terms are restricted while the capacity for insurance types decreases. So what follows is that commercial insurance is harder and more expensive to obtain. When a carrier pulls out of a certain market or region, it affects small business risk.
These unique market conditions and the challenges they present will also be addressed in The Evolving Risks Of Small Businesses series.
According to the Small Business Administration (SBA), as of 2022, “33.2 million small businesses exist across the country and employ more than 61.5 million people.” According to Patrick Foy, Sr. Director of Strategic Planning for TransUnion, “We conducted a survey of 500 U.S. small business owners in March 2023, in which 46% of respondents revealed they do not have insurance protection for their small business. Based on the Small Business Administration’s estimate of 33.2 million small businesses, that means that acquisition and retention opportunities could exist for more than 15 million uninsured U.S. small businesses. When respondents were asked why they were uninsured, 59% of them stated they believed they didn’t need it and 27% cited they believed it was too expensive.”
Furthermore, according to a 2023 survey conducted by NEXT insurance, “96% of respondents did not get a passing grade — a C- or higher — on a knowledge quiz about general liability coverage. No one scored full marks.”
So, two conclusions emerge from this data: 1. Small businesses still represent a growth market for carriers and agents who can address these needs, and 2. An educational gap exists for small- and medium-sized business (SMB) owners when it comes to commercial insurance.
The educational gaps that makes small and mid-sized business (SMB) owners reluctant to contract for small business insurance represent both a challenge and an immense opportunity for agents and agencies to help SMBs with business risk management.
Acquisition and retention opportunities exist for the un- and underinsured U.S. small businesses.
Many of the reticent small business owners mentioned above already have personal insurance policies with agents and brokers who may also offer commercial insurance from which these SMBs could benefit. With these relationships already in place, the opportunity is heightened.
According to a recent survey by Hiscox Insurance, “56% [of small business owners] found [agents and brokers] to be the most helpful source of information.” With the right tools and educational assets that address the evolving risks associated with commercial insurance, agents can target and address this massive growth and opportunity market.
The majority of SMBs are aware of the most commonly needed insurance policies, including Business Owner’s Policy, General Liability, and Workers’ Compensation.
Agents and brokers will start with these main products from a range of national and regional commercial carriers and bundle them with other coverages based on a business’s unique needs.
Understanding and addressing those unique needs and business risk management issues are when the agents’ expertise will be most needed.
However, the list of available products and carriers has evolved. Specialty carriers have emerged that protect unique items, services, or risks, such as cyber and flood. These fall outside of what standard insurance policies cover.
Well-educated agents who can provide the expertise that informs their SMB customers on the specific risks in this evolved landscape and the amount of coverage needed will become an invaluable resource.
The Evolving Risks Of Small Businesses series will go deeper into the most common, as well as specialty risks, starting later this month.
Bold Penguin is eager to share insights about the small business insurance landscape. Industry and timely conditions have created both an opportunity and a challenge for agents who can address SMB needs. We look forward to The Evolving Risks Of Small Businesses series playing a role in our partners’ success.
In July 2024, a completed The Evolving Risks Of Small Businesses playbook will be downloadable at www.boldpenguin.com.
The fourth installment in the Bold Penguin series on The Evolving Risks Of Small Businesses addresses the changing landscape and need for surety bonds.
Carlos Gonzalez-Avila, Small Business Insurance Specialist at Bold Penguin, provides insights on support for agents in the insurance business in this issue of 3 Questions.