Businesses facing massive insurance premium hikes

small business insurance

The Canadian Federation of Independent Business (CFIB) has sounded the alarm bells that businesses of all sizes, but particularly small businesses, were being hit with yet another body blow during an already horrific year.

In a study of Canadian businesses, the CFIB found that more than half of small businesses have seen their insurance premiums increase over the past 12 months, with one in six reporting an increase of 25 per cent or more. Closer to home, some hoteliers have reported a premium increase of over 200% while others have had difficulty finding anyone who will cover them.  The CFIB has been calling on the insurance industry and provincial governments to ensure small businesses have access to affordable coverage.

“Businesses can’t legally operate without insurance, but many have been priced out or are unable to find an insurer willing to cover them,” said Corinne Pohlmann, Senior Vice-President of National Affairs at CFIB. “It would be in everyone’s interest—business owners and insurance providers—to maintain those relationships and work together rather than shutting out a large sector of the economy from this essential service. We are pleased that the industry has tried to step up to find solutions but the situation remains dire for too many small businesses.”

Businesses in the hospitality, transportation and agriculture sectors were more likely to report a premium hike of 25 per cent or more in the past year. Nearly a tenth (nine per cent) of all businesses say they were not able to find an insurer willing to offer coverage for their business needs in the past 12 months, but that number rises to 14 per cent of hospitality businesses and 12 per cent of those in transportation.

Here in Niagara small business owners have not been immune to this situation. Greater Niagara Chamber of Commerce CEO Mishka Balsom said Niagara businesses are experiencing large increases in insurance costs especially those in the food and accommodation sectors. “It’s very difficult for these businesses that are also experiencing significant loss in revenue,” said Balsom.  She said in January the GNCC will be hosting a webinar on this very topic. “We need to bring industry experts together to rectify this situation.” She added it is important for the province to come to the table as well, saying that insurance companies are regulated by the province. “We need to find a temporary solution. We’ve heard from businesses how difficult this is.”

South Niagara Chambers of Commerce Executive Director Dolores Fabiano said, “While there is no easy solution to this issue, Canada’s insurers must work together to find creative solutions to support businesses across all sectors in accessing the insurance they need.  Our Canadian Chamber of Commerce has been working diligently on this matter, which has impacted businesses from coast to coast.”

The pandemic has exacerbated small businesses’ insurance needs: 40 per cent say COVID-19 has increased their risk of general liability. CFIB has kept governments and the insurance industry informed about the needs of small businesses and will be presenting its latest survey findings today at the Insurance Bureau of Canada’s National Commercial Insurance Task Force.

To help rectify the situation the CFIB has recommended the provincial governments provide liability immunity during the pandemic to all businesses performing services in accordance with applicable public health guidelines while acting in good faith. They also recommend that the insurance industry adopt a moratorium on cost increases and policy cancellations during the pandemic.

“The insurance industry is willing to listen to small business owners’ concerns and are trying to provide solutions with some providers proactively offering relief measures to their clients,” added Pohlmann. “I encourage businesses to call their insurance broker and see if there is anything available for them. At the same time, CFIB will continue working to ensure fairness for those still struggling to access coverage.”

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