Small and medium-sized enterprises (SMEs) nationwide are having a hard time securing business insurance products because of their needs and risk profile falling outside of the traditional scope of coverage, according to Dr. Enoch Omololu, the CEO of Savvy New Canadians.
“Small businesses are having difficulty understanding the type of coverage needed and who to approach, who really understands the business, and who is potentially able to offer them insurance,” he said.
“Unless you have a broker who is willing to actually give you a call and walk you through explaining what you do, how you do it, fleshing out the basics of your business, it can be extremely difficult to find insurance.”
This is especially true as the gig economy rises and remote working environments become the new norm post-COVID.
“The insurance industry is trying to catch up on what the risk exposure changes are and how to price that from a premium standpoint,” Dr. Omololu added.
In an interview with Insurance Business, Dr. Omololu spoke about why SMEs see insurance as a discretionary expenditure, why brokers need to help these business owners understand risk better and why having an extensive network can help clients get coverage.
Due to inflation and a higher cost of living, small business owners are operating on a much tighter budget than before.
“It’s easy to see insurance as a discretionary expense,” Dr. Omololu said. “When everything else is eating away at their margins, these businesses are questioning the need for coverage, especially if they haven’t had any claims in the past.”
Rising premiums have proven to be a sore spot for small businesses trying to navigate unsteady economic conditions.
Elsewhere, the increased number of work-from-home employees have also questioned the need for specific business insurance.
“The risk profile for individuals not going into office has shifted this mindset in needing commercial coverage,” Dr. Omololu said. “These business owners are thinking that because they have home insurance, that may cover them in case of a loss event, depending on what information they have given to their broker.”
These SMEs may be inclined to cover more immediate and pressing expenses and then look to insurance if there are any funds left over at the end of the month.
The best way for brokers to find the best and most comprehensive insurance options for a client comes down to the risk assessment and profiling stage.
“It can be challenging for a small business to understand their unique risks and what information is relevant for a broker to record,” Dr. Omololu said.
By sitting down with a client and trying to get to the root of their business and tailoring their service to individualized needs.
This also means that communication with the business owner needs to be ongoing, viewing their patronage as more of a partnership than a transactional occurrence.
“Brokers need to be investing in the long-term,” Dr. Omololu said. “This means checking in frequently to see if any risk factors have changed and adjusting or dropping coverage to deal with the client’s current and future business needs.”
As Canadian businesses express greater anxiety about the rising threat of cyber attacks, this is a good opportunity for brokers to impart integral risk prevention advice for an increased cyber posture.
“When business operations move out of an office and into the home, brokers need to make sure business owners are aware of what they can do to mitigate risk,” Dr. Omololu said.
“Whether that’s installing a VPN to keep the servers more secure or advising against the mix of personal and professional matters on work computers.”
While not every broker has an encyclopedic knowledge of niche small business concerns, those that tap into their professional network to offer solutions are setting themselves up for long-term success.
“Rather than having a client chase down individuals from different companies to find the coverage they need, a proactive broker should try to look within their own network to make that search easier for a business owner,” Dr. Omololu said.
This creates a more cyclical business opportunity and shows that, even if the broker cannot solve a problem themselves, they will still bring that level of customer service and set them on a path to success.
“Chances are that in the future, another broker within your network will not be able to satisfy a client’s needs and will refer them back to you if you have the solution they are looking for,” Dr. Omololu said.
