The events of 2020 have created a dire litmus test for businesses across almost every sector and organizations from small independents to global behemoths.
Small businesses have been disproportionately impacted, with research showing that 32% of businesses with 500 or more employees reported declines in revenue of 20% or more. This figure almost doubles for smaller businesses, where nearly 60% of those with five or fewer employees, and nearly 56% of those with five to 19 employees, reported declines in revenue of 20% or more.
Organizations have had to deal with an almost overnight shift to remote work environments, while families had to juggle sharing space within a home that also functioned as a school, daycare, office and gym. But even from the early days of the pandemic, several businesses have stepped up to support their communities, sometimes finding new and different ways to serve their audiences in light of the circumstances.
Shifting gears to stay afloat
“The insurance industry was already reeling from hard market conditions in early 2020, with the current pandemic dealing another blow. However, it has been heartening to see several examples of businesses taking the opportunity to shift their business models to stay afloat. The entrepreneurial spirit of small business owners is evident in the way many are looking for additional avenues of revenue to support their businesses,” said Chris Riverso, commercial underwriting consultant at RSA Canada.
Businesses that have successfully pivoted their operations have reviewed their business model with a critical view of what’s essential and pursued alternate channels to drive business, all while dealing with interruptions to cash flow, making tough staffing decisions and adjusting to remote working for an indefinite period.
“Our underwriting team has observed an uptick in broker requests for changes to operations or additions of new operations for some of our small business insureds. While it hasn’t been prominent enough to categorize as a trend, the requests from small business owners are becoming more common as changing restrictions are creating new operating conditions within their respective markets,” added Riverso.
Continuing coverage through change
RSA has continued to support its policyholders through changes to their operations or insurance needs in the past few months. It has always emphasized how critical it is for business owners to notify their broker and insurer before making any change to operations, as even a relatively minor change could constitute a change in coverage. The benefit to the business owner is that insurers can use this information to find the best coverage solution for this new operation, especially in situations where the shifted operations differ greatly from the original model. RSA can support the insured in making the right coverage choices as their businesses take steps to modify their operations.
For instance, an RSA policyholder who had a dog walking business had to re-evaluate her income stream when the pandemic hit, as many of her clients now had the time and flexibility to walk their own dogs during the day. This policyholder decided to add value to her business by offering some cosmetic services for pets as a means to support their business. In this particular case, a conversation with the broker resulted in RSA being able to find a new coverage solution to support the insured and continue their coverage.
When in doubt, talk to your broker
Many apparel companies pivoted their operations to create reusable fabric face masks in the early days of the pandemic when there was overwhelming demand but limited supply of PPE for consumers. For RSA policyholders who fell in this business category, no change was required to the terms of the insureds’ existing coverage, but it took a conversation with a broker to confirm this and give business owners the confidence to shift their operations. This instance highlights the importance of notifying the insurer and broker to validate the appropriateness of current business coverage.
“Insurance can be low on a list of stressful decision areas for a business whose existence and success is under threat all of a sudden. However, a simple call to a broker to get their advice can help ensure a business experiences minimal disruption to its operations,” said Riverso. “We’re proud to be supporting brokers and small businesses as they find ways to continue serving their customers and keeping the economy as stable as possible in these turbulent times.”
For more information, speak to your underwriter or visit rsabroker.ca for more information.