Survey Shows Small Businesses Buy Workers Comp without Understanding Ins and Out of Coverage

A national survey by EMPLOYERS, a leading Workers Compensation carrier, indicates that many small business decision-makers when purchasing a Workers Comp policy don't fully understand how the coverage works, what they get for their premium payments, or why they continue coverage with a particular insurer.   
  
EMPLOYERS' survey found that a significant 14% of small business owners and executives could not name their carrier. Additionally 13% said they do not understand how workers' compensation insurance protects employees with work-related injuries, or how their coverage can protect their small business's bottom line against catastrophic claims.   
  
A significant number of small business decision-makers reported they rely on state funds. Only 12 states operate state funds. Among survey respondents dissatisfied with their workers' compensation carriers, more than half use state funds. Survey results indicate that state funds appeal to many small business decision-makers who have little knowledge in terms of workers' compensation insurance and may be the insurer of convenience.   
  
A related survey result indicated that 18% of small business owners who reported having selected a new workers' compensation carrier within the last policy renewal period were unable to recall the provider they switched to.   
  
Seven out of 10 small business owners, partners, presidents and CEOs according to the survey depend upon their insurance agent to explain workers' compensation coverage and pricing. At the same time, 58% of these decision-makers reported they consider choice of a Workers Comp carrier a "hands-on" responsibility that is theirs alone.   
  
First-quarter 2008 results of the Small Business Market Monitoring Program were released by EMPLOYERS in collaboration with Profile Marketing Research, Inc., of Lake Worth, Fla. Data was collected through telephone interviews during the period December 2007 through January 2008 from a nationally representative sample of 400 small business decision-makers at companies with 5-49 employees. Overall survey results have a +/- 4.89 percent margin of error.   
  
A quarter of all small business decision-makers who identified themselves as policyholders of a company of EMPLOYERS.   
  
Price remains a deciding factor with 75% of decision-makers identifying it as their primary motivator in choosing work comp coverage. A total 69% ranked their carrier's financial strength as the second most important factor. A total 60% named claims handling as highly important in protecting small business operations in the event of an employee injury, and in helping to return valued employees back to work as soon as they are able.   
  
Significantly, the single most important source for small business decision-makers interested in learning more about workers' compensation coverage remains their insurance agent. A 66% majority of respondents reported turning first to their agent when in search of workers' compensation insurance information. Twenty-two percent identified the Internet as their secondary information source.