Although 96% didn’t achieve a passing grade in a general insurance knowledge test, most (82%) are taking steps to better protect their business.
PALO ALTO, Calif., March 15, 2023: NEXT Insurance, a leading digital insurtech transforming small business insurance, today revealed new survey results that demonstrate a significant gap between small business owners’ biggest stressors in 2023 and what they’re actually prepared for when it comes to their insurance knowledge and coverage.
The survey of 500 small business owners across the U.S. found that though 96 percent of respondents didn’t achieve a “passing” grade in a general insurance knowledge test, only a third reported actually seeking professional help when it comes to their insurance needs. But it’s not all bad news: 82% are taking some steps on their own to better protect their business, like reviewing their coverage or conducting a risk assessment. And it’s not that they’re doing so because they feel false confidence in their insurance know-how: 90% of small business owners surveyed said they lack confidence that their business is adequately insured.
“Insurance has long been thought of as a complicated yet necessary part of running a business,” said Alon Shiran, VP of Product at NEXT. “Insurtechs, like NEXT, are changing that by offering digital-first self-service platforms that are easy to navigate and understand, making the process of obtaining insurance simple and seamless. Our priority at NEXT has always been to enable small businesses to thrive. Through our digital-first self-service platform and machine learning-driven solutions, we’re providing entrepreneurs with coverage tailored to their specific business needs.”
Small businesses are often a bellwether for the greater American—and global—economy; when small businesses begin to feel pressured by inflation, supply chain woes, staffing shortages, and more, it signals broader challenges ahead. NEXT conducted the survey in early 2023 to understand what challenges are top of mind for this cohort, how prepared they feel for those challenges from an insurance perspective, and test their knowledge on general liability insurance. The overarching lesson found in the data: insurance is often a blind spot for small business owners. The survey found that:
- Small business owners are sweating the small stuff (and the big stuff): Over half of the respondents (51%) listed making a professional mistake—anything from workplace accidents or HR issues to clerical errors—as a top potential risk with the power to negatively impact their business this year. Surveyed small business owners also were aligned on their top stressors for the coming year: 68% are most concerned about inflation, followed by reduced consumer spending, a potential recession, and supply chain issues.
- Most small businesses are underprepared and underinsured (and some are fine with it): Despite 90% of small businesses lacking confidence that they’re adequately insured against their most worrisome risks, more than a quarter of respondents (29%) don’t have any business insurance coverage at all. More than half of those surveyed (51%) say their business is less than “very prepared” to face potential risks, but 18% of all respondents are not taking or do not plan to take any steps in the next 6 months to better protect their business.
- Insurance rivals taxes as a small business knowledge gap: For many small business owners, understanding the complex landscape of insurance can be tricky. Fifty-three percent of small business owners said their greatest barrier to obtaining insurance comes down to knowing what coverage and policies their business needs. Despite not knowing where to start, just one third will actually seek professional help (despite their significant concern for wanting to make a professional mistake—many of which might potentially be covered with the right insurance). When quizzed on general liability insurance specifics, 96% of respondents did not receive a passing grade (70% or higher). None of the 500 respondents got a perfect score, indicating that many still need the proper support to navigate the industry.
- Not all small business owners are the same – so insurance must be tailored: Survey respondents included men and women; spanned cities, rural areas, and suburbs; and accounted for entrepreneurs of all generations, identifying differences that indicate just how varied small business owners are—and how their insurance needs (and knowledge) vary. Rural business owners are more concerned about inflation than their counterparts in the suburbs (71% versus 64%). Cyberattacks or data breaches keep small business owners over 45 years old up at night compared to those under 45 (41% versus 30%). And female small business owners are facing a more challenging insurance journey than their male counterparts: women are more likely to feel their knowledge of coverage and policy needs for their business as a barrier to getting insurance compared to men (60% of women compared to 50% of men). Women are also more likely to not have insurance (35%) compared to men (25%).
“Small business owners today have to wear a number of hats, and often feel pressured to be experts in everything from taxes and insurance to finance and HR. This is an unrealistic expectation, and thankfully there are many resources designed specifically to support small businesses with the guidance, education, and tools needed to tackle some of the most common challenges they face,” said Alon Shiran, VP of Product at NEXT. “Insurance can be a daunting part of running a business, especially because without proper coverage, businesses can endure significant financial losses that could make or break their bottom line. Our goal at NEXT is to eliminate that burden with a simplified digital purchasing experience, embedded offerings through partners, customizable policies, accessible resources, and deep expertise so that small business owners can focus on what matters most – running their business.”
