Insurance agents provide unparalleled value to small businesses

The word “Amazon” now precedes the names of multiple online businesses that are targeting not only consumers but business owners. Example: Amazon Business Prime, which has teamed with an insurtech firm to provide members access to small business insurance products. This is one of many efforts by nontraditional providers to connect with small business owners by providing insurance services.

Is this of concern to independent agents serving the small business marketplace? Yes.

But it also points back to the fundamental value proposition of the independent-agent channel. Independent agents have a unique selling proposition based on the choice of carriers and products, customized coverage, and advocacy at the time of claim. Tens of thousands of independent agencies have made this combination work and still do.

The independent agent’s position in the driver’s seat means these professionals can deliver value unlike any other distribution model, including high-tech, high-touch value propositions such as Amazon’s. That’s because agents and carriers look at risk the way our customers look at risk. We know well the things that might possibly happen such as auto accidents, theft of funds or vehicles, and commercial building fires. Independent agents also understand other risks, such as fluctuations in cash flow and employees not showing up for work.

We, as carriers and agent partners, also know the positive things that policyholders want to have happen, and the risks that might sideline their journey to growth and success.

How do we know? Because we have ongoing, deep relationships with our customers.

Ideally, there is a strong partnership among the policyholder, carrier and agent. The business owner knows his or her firm best of all. The carrier can deliver broad-scope awareness of risks that other businesses face. The agent, meanwhile, has his or her own expertise and experience and is called on to be a master communicator with the other partners.

Business owners, especially new ones, often face three categories of risks:

1. Risks that they can mitigate on their own (do-it-yourself or DIY).
2. Risks for which they need outside resources to mitigate.
3. Common risks faced by every business, regardless of industry.

Carriers have risk management experts that independent agents can leverage.  Here is a sampling of information agents can share about the risks small business owners face in different areas. We’ll use the example of a local restaurant owner.

Do-it-yourself tasks

Here are five things that small business owners can do for themselves:

1. Integrate safety as the highest priority. If the business isn’t operating safely, that can lead to negative press and poor community relations, which affect profitability.
2. Research the most significant risks. Look into the biggest risks inherent to the type of business the owner is operating. The restaurant owner in our example must prioritize preventing commercial kitchen fires and will mitigate risks by frequently cleaning equipment and maintaining safety equipment, like suppression systems. That restaurant owner may also require training for safe use of knives and address footwear for employees.
3. Evaluate the potential safety risks. For the restaurant owner, this starts from the time a customer or employee drives onto the premises and walks into the building all the way through until they walk back out. It’s incumbent on the business owner, not the customer, to evaluate what needs to be done to make sure that diners and employees are safe every step of the way. The owner will evaluate slip-and-fall risks such as snow or ice in the parking lot or liquid on the kitchen floor. The restaurant owner will make sure that inside and outside the premises, there are proper security measures taken to protect customers and employees.
4. Keep things organized. Look at building operations, so the property does not invite clutter. In many restaurants and other retail environments, for instance, owners and employees tend to cram things into the bathroom (which is not a storeroom).
5. Look for hidden costs. Businesses paying lower wages and experiencing higher turnover are well-advised to examine the hidden costs of recruiting, hiring, and training employees. Owners who are busy hiring and firing typically don’t have the time and resources to make safety a priority.

When to seek out an insurance pro

Small businesses generally don’t have in-house knowledge or staff to focus on risk, like a risk manager. As an alternative plan, businesses can take advantage of resources readily available in the marketplace.

While businesses want to make money as soon as possible, small businesses should not make cuts or compromise safety in order to post profits sooner. In fact, doing so might cost more in the long run. A competitive analysis tool (SizeUp is one of several) can help businesses narrow the broader market into a target market. Such tools give business owners a way to assess the business, identify opportunities, and build revenue.

The industry-specific resources for a restaurant owner are:

1. A professional insurance agent. Many independent agencies have their own loss/risk control department that is available to customers. Likewise, the insurance carrier may have a risk control department that could provide support to the business.
2. Check lease agreements. Having an attorney review the agreement is vital because too often the landlord will pass on liability that the business owner shouldn’t be taking on. Be sure that it is stipulated in the lease what the landlord will be responsible for. And a prudent business owner will want to make sure to maintain the building properly. An attorney can make sure the same wording in the agreement that protects the landlord is in there for the business owner, too.
3. Review workers’ compensation regulations. Refer to the OSHA (Occupational Safety and Health Administration) website under the small business category to find regulations. For workers’ comp claims, call the insurance carrier’s 24/7 nurses’ triage line immediately to file the claim and report the incident.
4. Assess the property. Reach out to the local fire department to have the property inspected from a building fire prevention standpoint.
5. Evaluate the systems. Many data and security risks for a business come from computer systems and servers. These must be kept up to date to protect data. Choose a company that is highly rated from a security standpoint and check with an agent about cyber coverage.

Common small business risks

Small business owners can mitigate risks by evaluating common claims and risks that might face the business.

1. Protect and check employees. If the business has employees out on the road driving, it’s vital that they are protected, which means working with a professional insurance agent. This also means putting employees with good driving records out on the road (not those with a poor driving record). Likewise, a proper precaution is performing a criminal background check on job candidates who would handle cash transactions (including bank transfers and access to valuables).
2. Keep up with property. Hiring subcontractors to inspect building systems such as the roof and electrical system are also good risk mitigation steps. Better to bring an expert in before a loss rather than after. Maintain good housekeeping procedures, and avoid letting property and systems wear down or age.
3. When something happens, document it. A business owner must establish a process to document problems (such as an accident or other event) that occur in the business. It’s also helpful to take the time to gather evidence, take photographs, and provide video footage where possible. Timing is critical: The standard is to create an accident investigation timeline for the first 24–48 hours to capture details post-accident.

A closer look

Let’s take a closer look at restaurant risks, which are common to nearly every U.S. geographical market and thus are good opportunities for independent agents.

Small business owners need to research the significant risks for the type of business they are starting. For restaurants, commercial kitchen fires top the list of risks. Ways a restaurant can mitigate risk are:

1. Refer to commercial cooking equipment installers and service providers. This is a good way to build a written maintenance plan, which would include how often to clean equipment and ductwork.
2. Test the building sprinkler system. It’s a must to have a preventive plan to test annually for proper operation.
3. In restaurants, slips and falls are huge risks. If a business operates where there is ice and snow, snow removal and salting ice are necessary for customers to walk safely.
4. Train alcohol servers. A business takes on additional liability when selling alcohol. It’s a best practice to tap an outside vendor to train staff, including how to identify a drinking-impaired person. In this area, in particular, a written plan increases understanding of what an employee needs to do.
5. Work with the health department to comply with food safety standards.
6. A common source of restaurant employee injuries is cut from knives. The first safety step is to train staff on how to properly use a knife. Secondarily, each restaurant needs a “knife sharpening” protocol set up with a vendor.
7. Check for proper footwear. Are oils being moved around in the kitchen area where workers stand and walk? Check on the proper kind of footwear and soles required. Just as with any event, a restaurant operator needs to have a plan in place if something is spilled so as to clean it up to prevent slips and falls.

Robyn Hahn (RobynHahn@westfieldgrp.com) is president of commercial Llnes at Westfield Insurance in Westfield Center, Ohio.

See also:

• How insurance pros can ‘mend fences’ with small business clients
• Small business cyber insurance premiums up 7% in 2021
• The 5 reasons for small-business insureds’ drooping satisfaction