Reasons why insurance could be difficult to obtain for small firms

According to Dr. Enoch Omololu, CEO of Savvy New Canadians, small and medium-sized enterprises (SMEs) across the country are facing challenges when it comes to obtaining business insurance policies that effectively address their unique needs and risk profiles.

He claimed that small firms are struggling to find insurance because they don’t know what kind of coverage they need or who to contact about it.

“It can be tremendously challenging to find insurance unless you have a broker who is prepared to actually give you a call and guide you through explaining your business’s what, how, and basic operations.”

This is particularly the case in the wake of the COVID pandemic, when remote work has become the norm and the gig economy has taken off.

“The insurance industry is trying to catch up on what the risk exposure changes are and how to price that from a premium standpoint,” Dr. Omololu noted.

In an interview with Insurance Business, Dr. Omololu discussed why small and medium-sized enterprises (SMEs) see insurance as a luxury item, the importance of brokers educating SMEs on risk, and the role of a broker’s broad network in securing coverage for clients.

Being cognizant of worries about inflation

As a result of rising prices and inflation, small business owners are facing more financial constraints than in the past.

Insurance is often seen as a luxury item, according to Dr. Omololu. “These businesses are questioning the need for coverage, especially if they haven’t had any claims in the past, when everything else is eating away at their margins.”

For small businesses already struggling in this uncertain economic climate, premium increases have been a major setback.

Additionally, the necessity for specialized company insurance has been questioned by the growing number of remote workers.

“The mindset toward needing commercial coverage has shifted due to the risk profile for individuals not going into office,” Dr. Omololu stated. “Based on the information these business owners have provided to their broker, they are under the impression that their home insurance may provide coverage in the event of a loss.”

Small and medium-sized enterprises (SMEs) may prioritize paying for essentials first, and then, if money is still available at the end of the month, they might consider purchasing insurance.

Having a firmer grasp on risk

It all comes down to the risk assessment and profile stage when it comes to brokers finding the greatest and most complete insurance alternatives for clients.

Dr. Omololu warned that small businesses face a “special challenge” when trying to identify the specific dangers they face and the data that brokers should keep track of.

By taking the time to sit down with a customer, understand their business, and then customize their service to meet their specific needs,

Because of this, it’s important to keep in touch with the owner of the firm and see their support as a collaboration rather than a transaction.

If brokers want to succeed, Dr. Omololu says they must think about the future. “This involves regularly reviewing the client’s situation to identify any changes in risk factors and making necessary adjustments or cancellations to coverage to address their current and future business requirements.”

Brokers can take advantage of the growing concern among Canadian businesses about cyber threats by providing valuable advice on how to strengthen their cyber defenses.

“Brokers need to make sure business owners are aware of what they can do to mitigate risk,” Dr. Omololu added, speaking about the transition from an office to a home-based operation.

“That might include suggesting that employees not use company time for personal activities or suggesting that they use a virtual private network (VPN) to encrypt data on company servers.”

Increasing the breadth of available assets

Brokers that leverage their professional networks to provide solutions to specialist small business challenges are more likely to succeed in the long run, even though not all brokers possess encyclopedic knowledge of these issues.

According to Dr. Omololu, a proactive broker should attempt to seek coverage inside their own network to facilitate the search for coverage for company owners, rather than requiring clients to contact many businesses.

This demonstrates that the broker will continue to provide high-quality customer care and help their clients succeed even if they are unable to resolve the issue themselves, and it also opens the door to more cyclical business opportunities.

“If you have the solution a client is seeking, they will likely come back to you because another broker in your network was unable to meet their needs,” Dr. Omololu stated.