2023 Small Business Insurance Outlook – Forbes Advisor

As any small business owner knows, running a business can be risky business. From liability claims against you to cyberattacks, there are many potential dangers that can threaten a business’s livelihood.

From rising inflation to turnover, these are the issues that could impact your business’ insurance needs next year.

Demand for cyber insurance is growing

With the continuous advancements in technology, small business owners face an increased risk of cyberattacks. Adequate commercial insurance is crucial.

“From June 2021 to June 2022, Acuity Insurance saw cyber liability insurance claims increase by more than 50% on commercial insurance policies,” says Paige Nelson, Director of Product Development at Acuity Insurance.

Nelson notes that while you want to keep your small business insurance costs as low as possible, adding a cyber endorsement will cost you far less than the damage caused by any cybercrime. “At Acuity, the cost of adding a cyber protection endorsement to a commercial policy starts at around $260 per year,” Nelson says.

Even LLCs are expected to look into cyber insurance in 2023.

“Small businesses sometimes assume that cybercriminals only target large businesses because there is more to be gained financially, but the reality is that small businesses that don’t properly hedge their exposures present an opportunity for cybercriminals,” says Erin Rodliff, senior vice president of commercial and product small underwriting at Travelers Insurance.

To help mitigate the risk of cyberattacks and data breaches, Rodliff recommends business owners implement the following:

• Educate employees on how to protect company information.
• Enable multi-factor authentication (MFA) and endpoint detection and response (EDR) tools.
• Check your cyber liability insurance policy if you have one.
• Create a crisis communication plan for internal and external parties.

Staff turnover leads to more workers’ compensation claims

Nearly 3% of American workers left their jobs each month from May to September 2022, according to the United States Bureau of Labor Statistics. About 1% of workers were affected by layoffs during the same period. As staff turnover continues in 2023, insurance experts say companies should anticipate an increase in workers’ compensation claims.

“We know from our workers’ compensation claims data that more than a third of workplace injuries occur in the first year of work,” says Rodliff. “In fact, the 2022 Traveler Injury Impact Report – which analyzed more than 1.5 million workers’ compensation claims over a five-year period – found that first-year employees made up 38% of all small business workers’ compensation claims.”

As a small business owner, you can help reduce the likelihood of workplace illnesses and injuries by updating your employee onboarding, training, and support processes.

Supply chain bottlenecks and labor shortages delay insurance claims

“Supply chain bottlenecks and labor issues are making repairs and replacements more expensive, both in price and downtime cost,” says Nelson d ‘Acuity.

Take commercial auto insurance claims, for example. If you own a delivery business and there is a delay in getting new parts or a replacement vehicle, it can significantly hamper your day-to-day operations. The same goes for real estate claims, where increased building material costs and a delay in repairs can lead to lost revenue, especially if your commercial property is uninhabitable.

To help reduce these risks, Nelson says business owners should work with their insurance agents to make sure their business is properly covered.

Loss prevention measures are essential for commercial properties

As labor shortages and supply chain bottlenecks continue into 2023, it is increasingly important for small business owners to examine loss prevention measures.

“More frequent and severe natural disasters drive high demand for construction materials and skilled workers, inflating the cost of rebuilding businesses affected by wildfires, hurricanes, floods, wind and hailstorms, plus the cost of repairing damage caused by fires or broken plumbing,” says Jack White, business insurance sales and marketing manager for Farmers Insurance.

Therefore, small business owners should review their commercial property insurance policies to ensure you have adequate protection.

According to White, small business owners might consider investing in loss prevention measures, such as:

• Installation of security cameras and sprinkler systems
• Provide routine maintenance of electrical systems, furnaces and water systems
• Implement hours of operation, fire safety inspections, severe weather procedures, lockout procedures and evacuation plans for fire and medical emergency response teams
• Maintain the general cleanliness of the property to help prevent slips and falls
• Require contractor licenses and certifications, food safety and cleanliness certifications

Voluntary benefits are becoming more of a “must-have”

Voluntary perks are benefits that you offer your employees that they can choose to accept or decline. Examples of voluntary benefits often include disability insurance, financial services, health insurance, legal assistance, supplemental life insurance, and pet insurance.

In the past, voluntary benefits were considered a nice benefit for employees, but not essential.
But in times of high inflation, voluntary benefits can help attract and retain talented employees. It’s also a good way for your employees to offset the cost of unforeseen issues.

For example, a short-term disability can help your employees stay financially afloat if they’re dealing with medical issues, or pet insurance can cover the cost of a veterinary emergency.

“Because small businesses are critical to the economic health of individual communities and our nation as a whole, it’s important to provide valuable insurance solutions during tough economic times,” said Rich Williams, president of Combined Insurance. , a Chubb company.