Micro businesses have unique insurance needs. They are widely diverse in the trades they represent and depend on a small number of people to manage the many daily challenges of running a business. As a result, finding appropriate insurance cover often isn’t straightforward and generally is a low priority – despite being critical to their growth and even survival.
“Even in the best of times, small businesses face daily interruptions that can impede progress or cause damage, whether it’s an employee error that threatens a relationship with a key client or a cyber breach that exposes sensitive information,” said Jonathan Forster, SME Distribution Director at Travelers. “In recent years, major events including high inflation, Covid and Brexit have made insurance even more important as the cost of labour and materials has skyrocketed, leaving small businesses vulnerable if they experience a loss. Although insurance may not be a top priority for these small businesses, it provides a safety net that frees them to focus on what they do best, so they need to get this protection right – or make changes promptly.”
Katie Freemantle, Managing Director of FSB Insurance Service, agrees. Her organisation, launched in 2018 as the insurance service provider for the Federation of Small Businesses, is a partner of Travelers and helps small business owners understand their exposures and find suitable insurance.
“Small businesses focus on trading, staff, HR needs – insurance tends to be something they arrange without careful consideration,” she said. “New start-ups may need extra support to guide them to appropriate cover. Established small businesses may need that too but not know it, or they may not review their insurance often enough. We have seen businesses often select unsuitable cover because they don’t know what they’re buying or they’re unaware of the risks they face. Regrettably, this sometimes becomes clear only after a loss they weren’t insured for, so then they seek advice. That’s where we try to help.”
To do this, FSB Insurance Service creates regular opportunities to identify the needs of these small- to medium-size enterprises (SMEs). At frequent intervals, they ask clients to tell them about their business so they can confirm whether existing cover is sufficient – or uncover areas where it lacks protection and needs it. They have these discussions when placing new business, at midterm, pre-renewal and renewal, and they also send articles to clients about scenarios that should trigger an insurance review.
A chance comment from a client can help exposures rise to the surface, Freemantle said, such as when the owner of a furniture shop was telling FSB Insurance Service about her business and happened to mention that her husband, who had been made redundant during the pandemic, was now working onsite making furniture for the business.
“That changed the risk from ‘shop’ to ‘commercial combined’ and we needed to think about manual work, and if he was doing installation or entering customers’ homes to fit wardrobes,” Freemantle said. “It opened a conversation for us about limitations, exclusions, and the conditions the business must be able to adhere to at inception or renewal. The business had to fit that model so terms could be adjusted if not.”
At Travelers, Forster advises brokers to be on similar alert for changes to a business.
“An SME might pursue an opportunity to innovate or keep their business running, not realising it alters the nature of their business and exposes them to risks,” he said.
Once an SME’s needs are clear, it’s important to identify insurance partners who can support them, demystify complicated aspects of cover, and work within a tight timeframe.
“Travelers is excelling for us here,” Freemantle said. “Their PI Combined product perfectly suits our SME members’ needs, which range from small indemnity-only policies up to PI Combined packages that incorporate an office element, liabilities and other aspects. We have great relationships with their underwriters, who provide training to make sure we understand their products well and can explain them to our clients. Knowing the underwriters helps with trading too, because once you know who you’re speaking to, you can have quick conversations to make sure you’re on the same page. Referrals are always very quick – and timing is of the essence for SMEs.”
Though speed is important, so is accuracy – particularly for niche businesses that may be unable to find suitable cover online. FSB Insurance Service has no automated renewal in place for this reason – they conduct a pre-renewal enquiry with each customer, regardless of size. But if that changes, Travelers can support them here too, because a single underwriter can handle etrade and non- etrade business, providing one point of contact and a faster turnaround.
“It’s been an open, collaborative partnership with Travelers, and we’re constantly finding places where we can grow,” Freemantle said.
Growth isn’t about selling more insurance, she says. Rather, it’s about helping businesses adapt so they can reach the next level of success. Freemantle noted one such success story with a client – a fisherman from Scotland who sold his daily catch at the quay side to local restaurants. When restaurants closed during the pandemic, he decided to freeze the fish and sell them via the Internet.
“His current insurance wouldn’t meet his needs, so we made adjustments that would protect him,” she said. “It was such a success to help someone continue his livelihood. Knowing when changes are happening for a business helps us support them.”
For SMEs, pivoting can be a matter of survival. They are often nimble enough to adjust with minimal delay, but the stakes are especially high if they aren’t sufficiently protected. Having reliable, responsive support is critical.
“Ultimately, it’s important for brokers to review their SME clients’ policies regularly to make sure their cover protects them,” Forster said. “Shopping around for the best cover and moving business as needed can be a key part of helping a client achieve their ambitions.”
The information provided is intended for use as a guideline and is not intended as, nor does it constitute, legal or professional advice. Travelers does not warrant that adherence to, or compliance with, any recommendations, best practices, checklists, or guidelines will result in a particular outcome.
