Recession Dramatically Altered Small Business Insurance Habits
In an article for Insurance Journal, “Mood on Main Street: How Recession Changed Insurance Buying Habits,” Andrew G. Simpson suggests that the cost-saving measures that businesses and consumers adopted during the financial crisis will not soon recede from popular memory and in some cases, may be permanent.
The amount small businesses have been paying out in insurance costs has dropped about 17 percent since 2007 as opposed to just an 8 percent decline for middle to larger customers according to data compiled by Coming Research and Consulting.
Small business owners have not, however, simply let the effects of reduced payrolls in the face of layoffs completely control their insurance expenses. Many have gone farther, reducing coverage, lowering limits, raising deductibles, and refusing ancillary coverage options.
In a joint survey conducted in the summer of 2010 by Channel Harvest and sponsored by Insurance Journal, 20 percent of insurance agents responding said they had not seen any significant jump in policy cancellations or defaults, but 50 percent said their customers were actively making cost-cutting decisions and demanding more options to save money.
The good news is that most businesses have maintained a basic level of coverage and seem committed to but there is little to suggest they will return to their pre-recession insurance buying habits any time soon.