The Future of Business Insurance: In 2013 and Beyond

by Michele Postler, Monday, December 3, 2012

Business insurance is vital in running a prosperous business. It protects the company or small business against risks that may arise, whether it be fire, accident or computer malfunctioning. Most small businesses don’t have adequate business and liability insurance coverage as they are not aware of the options available.


How the Business Insurance Industry is Changing


The internet has provided great opportunities for home based, small businesses or sole proprietorships. It is imperative to understand that your current home insurance doesn’t always cover business activities, even when working out of the home. Home based business insurance is often needed as home owners insurance doesn’t cover commercial activities.

The internet is not new but more and more companies are creating customer and client friendly websites for convenience. With this comes a large computer network or server which may get overlooked when looking for the proper business insurance policy. The loss of the computer or database would be disastrous but it is also important to consider the interruption of work that may be a consequence of this shut down. Most service providers provide a service level agreement but are not willing to pay for any losses a company will occur if the service fails to perform without interruption. At the moment there aren’t any insurance companies that offer this type of insurance. But it’s possible that internet insurance may be available in the near future.


Recent Trends for Business Insurance


  • The price of business insurance is increasing due to the state of the economies in the US and Europe
  • Home based businesses are not adequately insured under their home insurance so business insurance is required
  • Business insurance policies are decreasing because companies are unaware of the types of coverage available
  • Customized policies are more in demand as businesses have more information available to them

What to Expect From Business Insurance in the Future


The underwriting for business insurance policies will be a lot more stringent and costly, mostly due to the slow growth in the US as well as the economic uncertainty of Europe. It is more important now to shop around for business insurance and to make sure the policy you are purchasing is exactly what you need and the costs are cheap. Business insurance is available for key person, buy-sell agreements as well as liability coverage.


What to watch for in the future


With the internet, customers have readily available information at their finger tips and are demanding policies that match their need exactly. Insurance companies will have to find ways to customize business insurance policies in the future.

The soft market is anticipated to continue for a few more years and businesses are not seeing a huge bottom line which makes them less willing to pay a higher premium for their insurance needs. Insurance companies are therefore decreasing their commissions and providing a higher level of service including
policies that are customized.

The underwriting requirements on insurance policies will continue to become more rigorous so insurance companies are compensating with discounts and higher levels of customer service. Business liability insurance costs, key person cost and buy-sell agreement insurance costs will most likely increase
in the next couple of years.