Business owners worry about gaps in insurance coverage, survey finds

About 8 out of 10 business owners recently surveyed expressed worries that specific events or losses would have the potential to affect their firms despite their existing business insurance coverage. Life insurance and business owner policies tied as the top concerns.

While 97% of those surveyed had business-related insurance, 83% are worried about potential losses, and another 83% are either actively looking or very likely to seek additional insurance policies to provide greater protection, according to the Gallagher survey.

In-demand policies

According to the survey, business-related insurance policies that are in high demand by business owners include:

• Business Owners' Policy (BOP): 48% would consider expanding or getting new BOP coverage.
• Life Insurance: 48% would consider expanding or getting new life insurance coverage.
• Employment Practices Liability Insurance (EPLI): 45% would consider expanding or getting new EPLI coverage.

The survey also uncovered that business owners of all generations and company size have a strong need for tailored business insurance coverage to alleviate their concerns.

Business owners’ major concerns

And what are some of these concerns? According to the survey, major concerns that business owners have over the next 12 months include:

• Climate Change and Natural Disasters: 68% have extreme or very high concern about how climate change and natural disasters could affect their businesses.
• Jobless Claims: 69% expressed extreme or very high concern about the potential impact of jobless claims.
• Cyber Attacks: 74% expressed extreme or very high concern about the impact of a cyber-attack on their business.
• Healthcare Costs: 70% expressed extreme or very high concern about the impact of healthcare costs on their business.

Selling insurance to business owners

Selling life insurance to business owners can be challenging at best. The agent pursuing the sale usually needs to have several skill sets, including a thorough knowledge of the business owner’s enterprise, as well as excellent sales and marketing techniques. Young Pham, financial advisor and banking expert at BizReport, recently shared some helpful hints that will allow agents to address some of these challenges and enhance their chances for success.

Among Pham’s suggestions:

Understand the business owner's needs. Agents should begin by thoroughly understanding the business they are working with. “Each company is unique, and its insurance needs will vary,” Pham said. “Customizing insurance packages to suit the specific risks and goals of the business demonstrates a commitment to the business’ success,” he added.
Conduct a comprehensive risk assessment of the business owner’s business. “Identifying potential risks and vulnerabilities allows you to recommend suitable coverage that addresses these specific concerns,” Pham said.
Educate business owners about different coverage options. Business owners may not be aware of the full range of insurance options available, Pham pointed out. So, agents should take the time to educate them about different policies, such as liability, property, workers' compensation, and business interruption insurance, and explain how each can protect their business.
Build strong client relationships. Agents should maintain open and transparent communication throughout the entire process with the business owner. In addition, they should address any questions or concerns promptly, and provide clear explanations of policy terms and conditions to the business owner.
Establish trust by being honest and transparent in all dealings. “Building a reputation for credibility and reliability can lead to long-lasting client relationships,” Pham pointed out.
Follow up with the business owner. Agents should not consider the sale to the business owner as the end of their interactions with the owner. “Regularly follow up with business owners to ensure their insurance needs continue to be met as their business evolves,” he advised.
Leverage technology. Agents should embrace technology to streamline the insurance process. “Utilize digital tools for quotes, applications, and claims processing,” Pham said. Also, they should offer online access to policy information and documents for convenience.
Agents should also leverage data analytics to assess risk and make data-driven recommendations to their business-owner prospects and client. Doing this, Pham said, can help business owners make more informed decisions about their coverage.
Provide exceptional service to the client. In the area of claims assistance, for example, agents should make sure that their clients know that they will be there to assist them during the claims process. “A smooth claims experience can significantly impact a business owner's perception of their insurance coverage,” he said.
Review policies regularly. Agents should schedule periodic policy reviews of the owner’s policies to ensure that the coverage the business has remains aligned with its changing needs. “This proactive approach helps demonstrate your commitment to their long-term success,” Pham said.
Build a strong network within the business community, Pham said. Agents should make it a point to attend industry events and join local business associations to expand their reach and connect with potential clients.

The Gallagher survey was conducted from March 29 to April 11 by Wakefield Research among a representative sample of 1,000 American business owners from organizations ranging in size from 1 - 1,000, and the median organization size ranging from 101 to 500.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]. 

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Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].