September 24, 2021 by Jason Contant
Insurance has become the top operating cost concern for small businesses, with seven in 10 reporting their premiums have increased since the beginning of the year, the Canadian Federation of Independent Business (CFIB) reported.
The ongoing hard commercial insurance market, which began even before the COVID-19 pandemic, has resulted in increased rates and some insurers withdrawing from hard-hit markets. Last month, CFIB conducted a special survey of more than 2,600 small businesses which found that businesses in the transportation (87%) and hospitality (82%) sectors were the most likely to report premium increases.
Jasmin Guénette, CFIB’s vice president of national affairs, said that another survey in October 2020 found 16% of nearly 4,000 small businesses polled saw a significant increase in their insurance premiums (25% or more) year-over-year. Another 40% reported their premiums somewhat increased (between 6-24%), while 28% said their premiums stayed more or less the same (increased or decreased by no more than 5%). Only 2% saw somewhat of a decrease in premiums, while 14% didn’t know (or not applicable).
“The hospitality sector, transportation, agriculture and construction are among those the hardest hit,” Guénette said in an interview Tuesday.
He said it has become increasingly difficult and costly for small businesses to find coverage. “CFIB has observed an increase in business concerns with commercial insurance costs since mid-2019, but many firms are now reporting that their rates are going up steeply, that they can’t find an insurer at a reasonable price, or even at all,” Guénette said in a press release Aug. 11.
So, what can small businesses do if they can’t find affordable insurance, or insurance at all? “What we tell our members is that if they have issues finding available insurance, or if they see a steep increase in the cost of their premiums, one thing we recommend is that they should reach out to the Insurance Bureau of Canada,” Guénette said Tuesday.
IBC has resources that can help businesses find brokers and insurers to fit their unique business needs. “We’ve heard stories like businesses with the same broker for 10 or 15 years in a remote community, and suddenly that broker quit or retired or whatever, and the business is left with very few options,” Guénette said. “Maybe it’s the location of the business, maybe it’s because of the knowledge of the business owner on the kind of brokers or insurers that fit the bill. The first thing to do is to call the Insurance Bureau of Canada and see what are some available options.”
CFIB is in regular discussions with IBC, Guénette reported. “They understand the situation, and they try to be as helpful to customers as possible.”
Celyeste Power, IBC’s chief strategy officer, told Canadian Underwriter Wednesday that IBC launched a business insurance helpline (1-844-2ask-IBC or by email at firstname.lastname@example.org), staffed by veteran industry professionals who can help businesses navigate the challenging market. “What we found is there are insurance options out there, but they’re just a lot harder to find than when we’re in a soft market.”
If businesses do need more help, IBC has also hired a team of risk managers that can work work the broker or agent and directly with a customer “to really essentially make sure the business is putting their best foot forward to the underwriters,” Power said. For example, if the business had a few break-and-enters, perhaps since that time, they have updated their alarm system.
To date, IBC has helped just under 200 businesses find insurance. And for the hospitality sector in Ontario, insurers put together a Business Insurance Action Team to help businesses such as restaurants, pubs and event halls if they cannot find insurance in the regular market.
In 2020, the industry provided more than $3 billion in personal and commercial insurance relief to help Canadians impacted by the pandemic. Of that total, $805 million in relief and deferred premiums has been provided to commercial insurance customers.
For small businesses, CFIB is calling on all provincial governments to introduce liability immunity from COVID-related exposure lawsuits for businesses. “It would be best if all provinces would address something like that,” Guénette said. “Liability immunity would be a sound public policy to adopt.”
Power said British Columbia, New Brunswick, Ontario and Saskatchewan have put in liability immunity orders. And Alberta and Nova Scotia put in orders for healthcare facilities. “We continue to say that it would be a helpful and important piece for all provinces to have put in place over COVID.”
Other provinces have programs related to commercial insurance, Guénette added. For example, Quebec introduced a program to help reduce commercial insurance premiums for private senior care homes.
Power said there are already some encouraging signs related to the hard market. “I can’t say when the hard market will end,” she said. “No one can say with any certainty when that will happen. But it will.”
Feature image by iStock.com/halbergman