Small businesses face a myriad of challenges throughout the business life cycle as they embark on new ventures and grow their operations. And insurance agents can serve as their guide and help them understand risks and insurance coverage options, according to The Hartford School of Insurance.
“It’s important for a small business owner to work with an agent who is there to help choose the right coverage for their business,” said Marie Alvarado, head of The Hartford School of Insurance, part of The Hartford Financial Services Group in Hartford, Conn. “They need to work with someone they trust, much like a lawyer, an accountant. An insurance agent, it really is no different.” The school recently launched a small commercial training program to educate new agency professionals on technical insurance knowledge focused on the needs of small business owners.
Insurance agents should be aware of the mindset of many small business owners, who often don’t realize how a change to their business could impact the insurance coverage they need, Alvarado said.
“You don’t have to look far to find a small business owner that either purchased a new piece of equipment, added or eliminated a location, changed the nature of their operations or is struggling with the seasonality of their payroll,” she said. “Change can be constant for these firms.”
But at the end of the day, she said, small business owners may not be aware of the new risks to their business and how disruptive emerging exposures can be. “Creating a trusted partnership where the small business owner discusses any changes with their agent when they occur or as part of an annual coverage review is key to a long, successful partnership,” she advised.
Alvarado said it’s important for small business owners to stay on top of emerging risks, and to understand the implications of not being fully aware of those risks.
“For many small business owners,” she said, “their business is their livelihood and a loss could be devastating.”
For example, a power outage that lasts several days could have a huge impact on a small business. “Imagine somebody who’s manufacturing ice cream, or a small bakery,” she said. Agents can help their small business clients understand what’s covered and can recommend additional coverages to help protect their business.
Alvarado said talking to small business owners about options like off-premises utility service coverage can educate them about the additional coverage that may be an option in replacing lost income or downtime.
Another example of a risk that’s frequently in the news is data breach. Alvarado said many small businesses don’t necessarily think a data breach could happen to them but they may be more exposed to the risk than they might realize. She said more than 30 percent of data breaches investigated in 2012 were from organizations with fewer than 100 employees.
“Having an understanding about this type of exposures can help a small business owner make sure they’re protected,” Alvarado said.