Claims experience affects small business owners' view of insurance services
A majority (52%) of small business owners believe they will face a claim in the next five years.
Insurers know that customer experience and satisfaction reflects critically on them, but many may be surprised to know that an insured’s claims experience also greatly influences their level of confidence in their insurance programs, the types of services they value and their view of their vulnerability to claims in the future.
The 2019 Small Business Risk Report, a joint effort by Forbes Insight and The Hanover Insurance Group Inc., surveyed small business owners in the U.S. who had experienced a business insurance claim in the last five years, focusing on the value they place on insurance, claims and risk management.
It found that 36% of respondents were unhappy with how their insurance claims were handled by their carriers, resulting in less confidence in their insurance program as well as their views on the likelihood for future insurance claims. By contrast, 94% of small business owners who experienced a claim in the last five years and were highly satisfied with the result expressed overwhelming confidence in their overall insurance program.
Related: Looking at the future of claims
It’s only a matter of time
If that wasn’t enough to wake up insurers, they should also know that a majority (52%) of small business owners believe they will face a claim in the next five years. The top three claims concerns small business owners expect to face in the next five years are property damage (25%), employee injury (21%) and auto accidents (12%). Rounding out the remaining perceived risks were data breaches or cybersecurity incidents (10%), an error related to work or service (9%), employment practices (7%) and slips and falls (5%).
Cyber incidents, in particular, concern many businesses at the moment as reports of a variety of attacks have surged in recent years. Eighteen percent of small business owners reported facing a data breach incident in the past five years, and the number is unlikely to abate anytime soon as virtually all companies must have a digital footprint to thrive in today’s marketplace.
Related: Protecting your customers’ personal data
Risky business
While all risks cannot be curtailed, most can be managed with the right approach. Risk management services provide value to small business owners who may not have the bandwidth to oversee many major aspects of their business, as well as limiting their exposure a growing number of exposures — such as cyberattacks, workplace violence and natural disasters, among others.
This may explain why 64% of small business owners reported that their local agent discussed risk management services with them, and why 69% of small business owners stated that multiple types of risk management services would be valuable to their business. In fact, the most valued services closely align with the types of claims small business owners were most concerned about.
Risk management services also present an opportunity for independent agents to educate small business customers as approximately one-third of small businesses reported they are not offered risk management services or were not aware of them.
“As a leading provider of insurance for small businesses, it is critical for us to understand the evolving risks and exposures for business owners so that, together with our agent partners, we can provide the most comprehensive insurance solutions to meet their needs,” Michael R. Keane, president, core commercial at The Hanover, said in a press release. “Our annual Small Business Risk Report further validates the importance of claims and risk management and the connection both have to future insurance buying behaviors.”