By Laura Mazzuca Toops, April 1, 2014, PropertyCasualty360.com
In a sign that the U.S. economy is finally on the (gradual) upswing, the entrepreneurial rate in the U.S. is now higher than it was at the height of the dot com bubble of 15 years ago, according to the Kaufman Index of Entrepreneurial Activity (KIEA) — which currently lists more than 20 million non-employer businesses, with more starting every day. As defined by the U.S. Census Bureau, non-employer businesses have no paid employees, have annual receipts of at least $1,000 and are subject to federal income taxes. These new businesses can range from part-time consultants to billion-dollar start-ups backed by big private-equity money.
But no matter the size of the business, the journey to successful entrepreneurship can be treacherous. According to the Census Bureau, 16% of companies fail their first year of operation, and 32% fail within their first three years. Most of those failures are due to incompetence and lack of experience, according to a January 2014 study in Entrepreneur Weekly by the Small Business Development Center at Bradley University and University of Tennessee Research.
Based on a series of national symposia for agents and insureds hosted by the Travelers Institute, the public policy division of Travelers Insurance, small businesses’ top issues are regulatory concerns, licensing and OSHA compliance, health care, access to capital, and disaster and business continuity planning.
But although most start-up business owners understand the need for basic coverage, they also underestimate how just one cyber breach, natural disaster, or nuisance employment lawsuit could decimate their business.
The independent agent advantage
Like most lines of business, direct writers have made inroads into the start-up specialty, although they currently only control about small single digit percent of the market. Part of the reason why independent agents own this segment of the business market is because of the wide variance in types of businesses insured. No direct writer has a product that can span from a management consultant down to a contractor or carpenter, the product needs to be diverse. Independent agents and small business have a long history of doing business with each other. Agents offer ‘concierge services’ that are critically important with for small businesses, and bring years of experience; they have seen it all, every type of claim. Small businesses need that expertise and understanding of problems before they happen.
Based on a series of national symposium for agents and insureds hosted by the Travelers Institute, the public policy division of Travelers Insurance, small businesses’ top issues are regulatory concerns, licensing and OSHA compliance, health care, access to capital, and disaster and business continuity planning. Read full article.