Small and mid-sized companies have learned in the last several years that change now comes faster than ever. In an environment of continuing economic uncertainty, slim profit margins, and new types of business risks, companies should reevaluate the breadth, scope and extent of their insurance coverage more often.
One of the best ways to assess the changing risk environment is by working with a trusted advisor, such as an insurance agent. The agent's job is to help a business achieve and protect its profitability by understanding its risk appetite and avoiding financial perils. This is not a one-and-done exercise because a company’s risk profile is constantly evolving.
New risks for businesses
The pace of technological change is an example of how quickly the world of business alters. New technologies, such as the Internet of Things (IoT), mobile business apps, and the cloud can come with new risks. For example, within four years, as many as 50 billion things or objects will be connected to the Internet. These will run the gamut from cars and appliances to clothing and building materials, each object embedded with sensors, software and network connectivity enabling the wireless accumulation and exchange of data. Without large IT staffs or budgets to assess these potential threats, businesses could be caught with insurance coverage voids or inferior limits of financial protection.
Many mid-sized and smaller businesses are already incorporating the IoT into products. In addition, they can use materials or services from other companies requiring or developing these new technologies. Because current insurance policies may not cover the costs associated with adapting to these changes, an insurance agent is often needed to evaluate and address how these products could impact a business and its bottom line.
Another example of the speed of technological change is the evolving composition of today’s workforce. Non-permanent “contingent” employees, such as independent contractors and freelancers, make up 40% of the total workforce.
How an insurance agent can help
Agents can help business owners manage the legal, compliance, and operational implication of these changes. An agent will endeavor to uncover a client’s unique risk exposures. To do so, the agent may ask questions about the nature of the business, the types of work conducted by employees, and the use of owned and cloud-based IT systems. The agent may study the client’s loss history, risk-mitigation tactics, and current insurance policies, looking for any potential shortfalls or redundancies. This will help the agent recommend a risk-management and risk-transfer strategy.
This refined risk-assessment process should be conducted once a year. The progress of today’s business environment can alter a company’s risk profile overnight, and a mid-sized or smaller company shouldn’t have to absorb the risk of being suddenly under-insured or uninsured. If a company’s circumstances have changed in any way, its agent should be contacted immediately to assess the change in relation to current insurance policies.
What kind of insurance do I need for my business?
Speaking to an insurance agent about your specific business is the best way to assess your insurance needs. Another important reason why partnering with an insurance agent can provide value relates to the cost of insurance. Such trusted agents understand the balance between the right coverage and the right cost.
Agents are trained to help provide insurance coverage that is a fit for you and competitively priced. They should be right-hand advisors whose priority is to assist the business owner in managing both the upside and downside of risk. Use our agent locator to help you find an agent with your best interests in mind.