Sixty-eight percent of Canadian small businesses list insurance costs as their leading concern, according to a Canadian Federation of Independent Business report.
The report found that commercial property, commercial auto and general liability commercial insurance are the three most common insurance types for small businesses and are the priciest. Fifty percent of the businesses surveyed said their insurance premiums have increased by at least 10 percent in the past 12 months.
A 10 percent uptick in annual total insurance costs would increase premiums by approximately $1,500 for a typical small- and medium-sized business.
“Commercial insurance provides a safety net for small businesses and protects them against financial losses, property damage or natural disasters. But it's getting harder and costlier for small businesses to get coverage, at a time where they're already grappling with many other cost increases," said Jasmin Guenette, CFIB’s vice president of national affairs. "In certain provinces, businesses also have to pay a tax on all insurance products plus another tax on premiums. This can quickly add up and contribute to the financial burden small firms are facing.”
Fifty-six percent of businesses reported retaining their existing insurance provider because no other affordable options met their needs. Over six out of 10 businesses got insurance from only three companies.
“While most businesses are content with the customer service they receive and how responsive their insurance provider was, there's still lots of room for improvement. For example, small businesses want a better process of obtaining or renewing their insurance,” said report co-author Michelle Auger, CFIB's senior policy analyst.
CFIB recommended that governments reduce insurance costs by removing the insurance premium tax and retail sales tax imposed on insurance products for small businesses. It also suggested providing a consistent regulatory environment through collaboration between provincial and federal regulators.
Moreover, the business organization called for the elimination of significant barriers to entry for new insurers in the Canadian market. It pushed for alternative insurance options like captive insurance or cooperatives to strengthen market competition.
“It's concerning that small business owners are being charged an arm and a leg for something so vital to their operations. It's up to the governments and the industry to make sure that insurance rates are affordable and there are a variety of options available to small businesses,” Guenette said.
CFIB also urged the insurance industry to support small business clients more, to provide customized tools and knowledge, and to be fair and transparent about fees. In addition, the organization sought the inclusion of an entire chapter for small businesses in the Insurance Code of Consumer Rights and Responsibilities.
The CFIB is a major SME association seeking to improve business owners’ chances of success by pushing for policy changes, offering expertise, and negotiating exclusive savings.