In a hard market environment, many small business owners are cost-conscious when it comes to workers compensation insurance coverage. However, experiencing a claim shifts insurance priorities away from price, according to The Hanover's “2024 Small Business Risk Report: A Focus on Workers' Compensation."

For small businesses without any workers comp claims, price is a significant factor when purchasing a workers comp policy, according to the survey. In fact, 60% of small business owners who have not experienced a claim rank price as one of the two most important factors in their purchase decision.

However, of business owners who have made more than one workers comp claim, 40% rank price as one of their top two factors. Instead, small business owners who have experienced workers comp claims place greater value on risk management and claims handling than their claimless peers.

Forty-seven percent of business owners that have experienced claims say employee services is one of their top considerations for a workers comp policy, versus 44% of their non-claim peers. Additionally, 40% of businesses with claims prioritize claims handling, versus 36% of businesses with no claims, and 36% of businesses with claims prioritize risk management services, compared to only 28% of those without claims.

Independent insurance agents have an opportunity to proactively help customers consider the value of a workers comp policy beyond price—before they learn the hard way. More than 2 in 3 small business owners reported that they consider a recommendation from their insurance agent to be a very important factor when purchasing workers comp insurance, making it clear that small business owners value the input of a trusted advisor.

Agents can also educate small business clients on thorough risk mitigation. The vast majority—94%—of small business owners believe they have a very strong safety culture, 89% are very confident they have proactive measures to help keep employees safe, and 95% say they provide safety training to employees at least once a year. However, The Hanover survey shows that small business owners lack a comprehensive approach to these proactive measures and that it often takes a claim to burst that bubble.

Only 51% of small business owners without claims conduct regular safety inspections and audits, compared to 68% of small business owners who have experienced claims. Fifty-three percent of businesses without claims have a health and wellness program, rising to 65% among those who have claims. And only 21% of those without claims leverage a nurse triage service—an amount that jumps up to 51% among those who have claims.

"With most business costs rising, small business owners continue to look for ways to reduce risk exposures," said Charles F. Hamann, president of small commercial at The Hanover. "The report data indicates small businesses value support from their independent agents. Additionally, the risk management services carriers offer today are critical to their success. While such services are ranked highly, there is an opportunity for agents and business owners to take a more proactive and holistic approach to worker safety."

AnneMarie McPherson Spears is IA news editor.