Canadian Underwriter

Canadian small businesses stung by insurance rates, says poll

October 15, 2003   by Canadian Underwriter

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A new poll suggests insurance rate increases are the number one negative force affecting small business. The poll, done for CIBC by Decima Research, shows that 55% of Canada’s small business have been hit with rising insurance rates, while just 33% suffered from other events such as SARS, Mad Cow and the August blackout, in terms of net impact on revenues. Just 28% say international events such as the war on terrorism or the war in Iraq have hurt their businesses. And 15% cite negative effects on revenue from the strength of the Canadian dollar, although 11% named this as a positive factor on revenue.
“Clearly insurance challenges impact Canadian small business more than any other domestic or international economic or political event,” says Rob Paterson, CIBC’s senior vice president of small business banking. “Anything that impacts the profitability of Canadian entrepreneurs ultimately impacts Canadian competitiveness, and the economic prosperity of us all.”
Nonetheless, businesses were not rushing to minimize the impact of future disruptions from economic or political events, with only 11% saying they have specific new plans in this regard. For that 11%, plans include increasing capital reserves (31%), purchasing capital equipment (24%), and increasing cash on hand (20%). And business owners say the events of the past year and their negative implications have not changed their drive to be entrepreneurs. . “While it’s heartening to see such bullishness among Canadian small business owners, I can’t stress enough the importance of planning for future business hardships,” says Paterson. “It helps smooth out the inevitable peaks and valleys of entrepreneurial life.”
In the next five years, small business owners see taxes (11%), the economy (9%), and government bureaucracy (8%) as the key challenges they will face.

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