Small Business Isn’t Simple Business

Article by Insight & Analysis for the Independent Agent

Written by Will Jones


Less than 37% of small business owners feel they have adequate insurance protection, according to the 2018 Small Business Report, conducted by Forbes Insights and The Hanover Insurance Group.

Small businesses come in many different shapes and sizes, and their coverage needs can vary wildly—which often renders multipurpose products insufficient. Moreover, the day-to-day responsibilities of the small business owner seldom leaves them with enough time to give their insurance needs the necessary thought.

“The small business owner wears a lot of hats,” says Chip Hamann, chief underwriting officer, small commercial, at The Hanover. “They’re focused on sales and revenue because that’s what keeps them in business. Things like insurance policies become secondary.”

The study also reports that as little as one-third of small business owners spend sufficient time devoted to assessing their insurance needs, while less than half haven’t reviewed their policy and coverages within the past year.

The solution? You. “It starts with the independent agent—the trusted adviser,” explains Michael Keane, president, core commercial, at The Hanover.

Small business owners face several difficulties when attempting to find the right coverage. One of the toughest is an evolvingly complex business environment, “which is hitting them from a number of different areas,” says Keane, who cites examples like cyber, data breach, employment practices liability, professional liability and international exposures.

The main challenge for small businesses is that “there is no one size fits all—the business itself can change day to day, and certainly annually,” Keane says. “Small business doesn’t mean simple business. That is really where the independent agent plays a key role in helping the small business owner assess where their needs are.”

“There are all sorts of complexities that didn’t exist 30 years ago,” Hamann agrees. “It used to be that someone would do something from start to finish. Now, they outsource all sorts of different things, such as where they get their goods from, who sells their goods on their behalf—exposures are growing because businesses are more interconnected.”

Importantly, every small business has specialized insurance needs; according to the study, 80% recognize they face exposures in more than one area. Moreover, small businesses are waking up to the fact that they need to assess their coverage: 41% are planning on obtaining or expanding cyber coverage, while 59% are planning on obtaining or expanding EPLI coverage.

But with only 21% of small businesses leveraging recommendations about coverage from outside experts and 82% agreeing that proper coverage is more important than pricing, Keane says “it’s an opportunity for both the business owner and the agent to sit down and have a comprehensive review of what the needs are.”

Will Jones is IA assistant editor.

Show Your Employees You Care Without Spending a Dime

As a small business owner, it’s likely difficult to attract and retain good talent. Large organizations typically have the resources to provide their employees with 401(k)s, life and disability insurance, paid vacations and health care plans. Unfortunately, your offer of “Bagel Wednesdays” simply isn’t as attractive as it might seem on paper. But the truth is, you can show how much you value your employees by offering health care benefits that won’t cost your company a dime or just a little bit, the choice is yours – and the window of opportunity is November 1-December 15, open enrollment time for the Affordable Care Act.

How the Affordable Care Act helps Small Businesses

The Affordable Care Act states that an organization with 50 or more full time equivalent employees must offer a health care plan to its employees, or be taxed by the government for not offering it. However, this rule does not apply to small businesses with less than 50 full time equivalent employees. Instead, the ACA has a rule for small businesses that has a lot of appeal – you can offer health care to your employees, and you don’t need to meet an enrollment participation threshold, nor are you required to cover any portion of the employee’s premium (unless you would like to).

This benefits you, the employer, because now you can provide something of value to your current and prospective employees that can help you better retain and attract talent. And it won’t hurt your bottom line if you elect not to cover a percentage of the premium.

How does this benefit my employees?

You may think that offering health care with no commitment to covering a portion of an employee’s premium seems of little value, but you would be wrong. By offering health care benefits, you are providing your employees with options they wouldn’t otherwise have.

The state of Ohio – relative to the Affordable Care Act – has only three insurance companies that offer individual health care products, and you must enroll via the exchange (the Federal health care marketplace). These three companies are Medical Mutual, Molina and CareSource. There are issues with having only these three companies offering health care on the Ohio exchange.

  1. Lack of strong competition means higher costs
    If there aren’t enough companies vying for your business as an individual on the health exchange, then these companies are not incented to keep costs low.
  2. Two of the three companies are Medicaid Managed Care companies
    Medicaid Managed Care companies are culturally aligned to providing care to Ohio’s underserved communities – a noble mission, but not necessarily one that benefits the typical health care consumer.
  3. Medical Mutual of Ohio, CareSource and Molina have limited provider (doctor) networks
    All three carriers only offer HMO plans. What is an HMO plan? An HMO (Health Maintenance Organization) is an insurance plan that serves you within a specific group of doctors and hospitals that the insurance company has contracted with. Which means you can only go to doctors within their network. There is NO out-of-network coverage.  This is one of the ways insurance companies keep costs down. Unfortunately, as this pertains to Ohio’s individual exchange options, that means people will have access to a limited supply of doctors based on the plan they choose.
  4. Nationwide Children’s Hospital is Not an Option
    As of today, Nationwide Children’s Hospital is NOT in-network with any of the carriers when looking at any of individual plan options.

So again, even if you’re company doesn’t have the monetary resources to contribute to the premiums of a health plan offered to your employees, simply offering a group plan gives your employees options that he or she wouldn’t otherwise have.

Hurry! Open Enrollment is a Short Window

But you need to enroll between November 1 through December 15. Because after that, the door closes, and we won’t know what the health care landscape will look like in our country for 2018 until…well…we know.

For more information about group health plans, or to move forward with offering a plan to your employees, contact Jill Eisenberg at Eisenberg Insurance.