Small business owners mostly focus on insuring their building and tend to overlook the shutdown and cyber exposures that come with running a business, according to Lisa Thomson (pictured), vice president, commercial lines, small business, at Wawanesa Insurance.
Thomson told Insurance Business that owners know they need to show a bank proof of coverage or bring a certificate on site, but don't necessarily understand the other exposures that come with their business operations.
Owners often haven't considered what a shutdown would mean for the business, Thomson said. Online payments and supplier relationships now run on technology, she said, which creates cyber risk.
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Owners tend to feel they are too small to be targets for cyber risk, Thomson said.
"Threat actors are increasingly targeting small businesses because they know they don't have the budget or the resources to have the large, sophisticated systems to defend against a cyber incident," she said.
Growth adds another gap, she said. As a business expands, owners should ask whether their insurance program has grown with it.
Thomson said the gaps between what owners think they have and what they actually have sit in technology and business interruption. Owners tend to focus a lot on price and speed, she said. Both matter, and it's up to brokers and insurers to remove friction so owners can get back to running their business, she said. But owners sometimes need more help understanding what their exposures are.
Responsibility for that sits with the broker, Thomson said. What they put in front of an owner needs to be "fit for purpose," she said, and capture exposures the owner hasn't thought of.
Natural catastrophes are having "a larger impact on a greater portion of the population and the economy," Thomson said, and some of that isn't necessarily captured in the risk process. She also named AI and technology, cyber and business interruption as areas where small business exposure has shifted.
She said US trade-related actions may affect owners' ability to run their businesses and could change their insurance exposures, and asked whether owners have considered that and prepared for it.
"The fragility of our economy has really changed the shape of our landscape, in particular for the small business," Thomson said.
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Thomson said the pressure on owners comes from economic instability and from questions about how to keep running a business and stay protected. The industry needs to do a better job educating the small business space, she said.
At a Wawanesa-hosted commercial insurance broker panel in Vancouver, Thomson described the same tension from the insurer's side. Small business owners are busy running their business, she said, and many treat insurance as a tick-box exercise, though some are more sophisticated and interested in what is and isn't covered.
Balancing speed and efficiency with strong underwriting is "a tough balance," she said. Wawanesa is simplifying workflows so underwriters have time for work that adds value for brokers and business owners instead of "process for the sake of process," she said, and is adding training for underwriters across the country.
"Automation is a bit of a slippery slope because if you over-automate, you're putting the company at risk potentially, and if you don't automate enough, then we create friction for yourselves and for your clients," Thomson said.
She said the company has had bumps in the road since it moved to a national structure. Efficiency has improved over the past few months, she said, though work is continuing , and she expects a much bigger impact in 2027.
Even in small business, Thomson said, underwriters need to bring a thought process and critical analysis to their decisions. She said the need for risk assessment "allows us to make sure that we are making strong decisions, that we have strong balance sheets, so we can pay the claims, so that we can be there for our members and their communities."
Because an owner is focused on running the business, Thomson said, they probably assume they're covered once they have a policy. She said owners should ask their broker to walk them through their worst-case scenario and how the policy would respond. Price is usually a concern, she said, but it shouldn’t be the only one.
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"If I were a small business owner, I would say to my broker, give me your cheapest option, and then give me your best option, and tell me, walk me through what's different," Thomson said.
"I think that would allow a small business owner to really make a very educated decision about the value of the premium that they're paying, and have that confidence that their policy is going to respond in the way that matters most to them."
