How do small businesses approach workers' compensation?

New study by The Hanover provides insights

How do small businesses approach workers' compensation?

Workers Comp

By Terry Gangcuangco

The Hanover Insurance Group has published its 2024 Small Business Risk Report: A Focus on Workers’ Compensation.

This latest edition of the report, the fifth in a series, delves into the criteria small business owners use to select their workers’ compensation plans, the importance they attribute to risk management services, and how their perspective on these programs changes after a claim.

In collaboration with data analytics firm Statista, The Hanover surveyed 300 small business proprietors across the US. The findings revealed a shift in priorities depending on claim experience: 60% of owners without claims emphasize cost as a critical factor in their decision-making process, whereas this figure drops to 40% among those who have filed multiple claims.

For those with repeated claims, there’s a heightened appreciation for risk management and claim processing, with 45% of such owners placing these as top considerations.

The poll also found that business owners are deeply committed to employee safety, with 95% regularly conducting safety training. Those who have filed workers’ compensation claims tend to utilize such training more frequently.

As indicated, experience with claims leads business owners to prioritize employee safety and risk prevention over cost. According to the study, over two-thirds of business owners value their insurance agents’ recommendations highly when selecting workers’ compensation insurance.

The perception of safety within businesses also differs markedly based on claim history; 70% of those without recent claims rate their safety culture as “excellent,” compared to less than half of those with claims.

Charles F. Hamann, president of small commercial at The Hanover, said: “With most business costs rising, small business owners continue to look for ways to reduce risk exposures. The report data indicates small businesses value support from their independent agents.

“Additionally, the risk management services carriers offer today are critical to their success. While such services are ranked highly, there is an opportunity for agents and business owners to take a more proactive and holistic approach to worker safety.”

According to the report, two-thirds of small businesses faced a workers’ compensation claim in the past five years.

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