| Coalition is an insuretech covering commercial businesses. The company’s 2022 Executive Risks Report checked in with 1,000 small business executives. These are people who make insurance decisions for their business. Over half say they don’t purchase directors and officers insurance and employment practices liability insurance because they’re too small and don’t really need D&O, EPL and/or Fiduciary Liability insurance. Patrick Mitchell heads executive risks at Coalition. He said the acceleration of more digital work created by the pandemic means small businesses are now more at risk than ever. “For example, moving from brick-and-mortar sales to online stores is a transformation that creates privacy, tax, supply chain and security issues unique to online transactions and data. Data is the single most valuable asset of modern businesses, making poor data governance and security even bigger risks,” Mitchell noted. “The digital acceleration has also exacerbated existing reputation issues for companies, such as concerns around fair working conditions (and litigation) and the influence of social media trends on businesses’ image. We know that these trends aren’t going away anytime soon, so businesses who don’t address corporate risk stemming from digital transformation procrastinate at their own peril.” And with that he pointed out that close to half of small businesses — across a bunch of industries — have been threatened by lawsuits. A report from the Small Business Administration’s (SBA) Office of Advocacy says Mitchell is correct and noted that between 36% and 53% of small businesses are sued every year. “Risk is a great equalizer for organization, no company size or revenue figure can keep executives safe from being targeted,” the report said. “Any privately held organization’s officers or board members or even employees can be sued over the decisions, errors, willful actions, or even statements they make.” Coalition and the SBA both note that more than a third of small businesses with D&O coverage have filed claims in the last two years. One of five of them with EPL coverage have filed a claim. “The larger employment trends impacting businesses of all sizes are hitting SMBs even harder because they have fewer resources to deal with these risks,” Mitchell said. “The pandemic hit SMBs hard, resulting in layoffs at businesses that don’t have the sophisticated risk management operations, or budget to get advice from an outside law firm or provide employees with severance, to help them avoid some of the classic pitfalls.” Source link: Digital Insurance |
