Small Business Risk Report

Key findings

The 2018 Small Business Risk Report reveals that while small business owners are aware they face multiple risks and growing concerns, they often are not spending enough time assessing their insurance needs.

Small business owners acknowledge they operate in a complex and changing risk environment
  • Small business owners (SBOs) are exposed to several risk categories, with 94% of businesses facing cyber security risks, followed by 72% of businesses facing employment related and crime risks
Small business owners report they do not dedicate sufficient time to ensuring they have proper insurance protection
  • 33% of SBOs completely agree they spend sufficient time devoted to assessing their insurance needs
  • 43% of SBOs haven't reviewed their policy and coverages within the past year
Small business owners need help selecting insurance solutions for key vulnerabilities
  • Of the SBOs that report they are exposed to employment related risks, only 23% are expanding insurance coverage
  • Similarly for small businesses that face cyber related risks, 24% are obtaining insurance coverage and 17% are expanding to address these risks
Small business owners value coverage, yet often do not leverage outside experts when making insurance decisions

  • 82% of SBOs agree proper coverage is more important than pricing
  • Yet, only 21% are leveraging recommendations about coverage from outside experts
Michael Keane

With risks evolving and becoming more complex, it's more important than ever for small business owners to consult with independent agents to evaluate their insurance needs and help ensure they are properly protected.

Small businesses: A changing risk landscape

As we look at how the risks small business owners face align with what keeps them up at night, 94% are exposed to cyber and data breach risks. They also rate data breaches and cyber attacks at the top of their list of concerns.

While 72% of businesses report that they have crime and employment related risks, concerns related to fraud (16%), employee dishonesty (19%), the safety/well-being of employees (18%), and lawsuits from current, former or prospective employees (9%) are not high on their radar.

Chart:Top risk of small businesses

% of SBOs who answered YES

Chart:Top concerns of small businesses

80% of small businesses recognize that they are exposed to risk in multiple areas. Small businesses engage in business activities that present several different kinds of risks.

Trending topic: Increased risk areas

Media coverage on discrimination, harassment and data breaches has skyrocketed in recent months, bringing more attention to these areas for small business owners. While small business owners face multiple risks, the top two areas of risk facing the majority of respondents are cyber security incidents (94%) and employment related allegations (72%).

We've examined how likely small businesses are to purchase insurance to help protect themselves from these growing risks. Overall, we've found that a small percentage of small business owners have strong confidence they are adequately insured, but a larger group has plans to obtain or expand insurance coverage in these evolving areas of risk.

Cyber security risk

Chart:Cyber security risks

There is a subset of small business owners (~11%) who are either not aware cyber coverages are applicable to their businesses or do not know if they are adequately insured against these risks.

Employment related risk

Chart: Employment practice risk
Michael Keane

Small businesses are being targeted by hackers and malicious threats. It's crucial for small business owners to have plans in place to keep data safe‚Äďand the right coverage in order to recover from a cyber security incident.

Spotlight: Insurance buying behaviors

33% of small business owners report they have strong confidence they are spending enough time exploring insurance coverage options for their business. Only 37% have strong confidence they are adequately insured.

1 in 3 small business owners spend sufficient time assessing insurance needs or exploring insurance coverage options.

And, while small business owners acknowledge their risks continue to grow and evolve, only 57% have reviewed their insurance program in the past 12 months. By not regularly evaluating their insurance programs, small businesses are faced with potential coverage gaps.

Small business owners value coverage when selecting an insurance program

82% of small business owners report they agree proper coverage is more important than price. And, 33% rate breadth of coverage as their number one priority when selecting insurance. However, only 21% report leveraging outside experts, such as independent insurance agents, to help evaluate their business risks and guide their decision-making processes.

82% of small businesses agree that coverage is more important than price when purchasing insurance.