Size matters - when it comes to purchasing insurance

I came across an interesting report issued last year by the National Association of Insurance Commissioners, NAIC. This report was commissioned by the commissioners to get a pulse on business owners, particularly small business owners, and their respective insurance buying habits/priorities. While this report contains a veritable treasure trove of data, to the delight of the info geeks among us, the portion I am highlighting addresses the size of small business when they choose to purchase different types of business related insurance. The survey contacted small business across a broad related spectrum, specifically with 100 or less employees. Over 90% of business contacted had property and liability insurance. Of these, only 48% had some type of commercial auto insurance. This suggests two things, either these business didn't have any type of commercial auto exposure, or they were relying on their personal auto coverage to get them by. While I'm not going into the areas of coverage lacking in a personal auto policy vis-a-vis commercial auto insurance, it is interesting to note the increase in purchase of coverage when companies expanded, i.e. increased employees and/or revenue. The same held true in relation to the purchase of workers compensation. While this report touches on many other areas relating to small business insurance buying habits, it's interesting to note the apparent increase/urgency in insurance buying habits as a business expands. It seems an increase in assets requires a corresponding increase in risk management/risk transfer applications and their relative importance to the business expands as well.

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