The National Association of Insurance Commissioners (NAIC), of which the District of Columbia Department of Insurance, Securities and Banking (DISB) is a member, today  launched a comprehensive public education program to assist small businesses with information about business risks and insurance options. Under the banner of Insure U for Small Business, the campaign includes an online education site, public service announcements in English and Spanish, and community outreach by public information officers of state insurance departments.

The Insure U for Small Business curriculum, available at www.insureUonline.org/smallbusiness, includes six categories of vital information to small businesses: workers’ compensation; group health and disability; business property and liability; commercial auto; group life and key person life; and home-based business insurance. After reviewing the curriculum’s helpful explanations, tips and considerations, small business owners and managers can test their knowledge about insurance issues by taking an online quiz. Upon successful completion, they can download an Insure U for Small Business diploma.

“Small businesses are a major engine of our national economy, employing millions of Americans and generating immense economic activity,” said DISB Commissioner Thomas E. Hampton. “Small business owners need to understand the array of business risks they face, as well as how to protect themselves with the right insurance coverage. Insure U for Small Business will help small business owners and managers make smarter insurance decisions.”

Research conducted by the NAIC in March revealed that many small businesses—defined as those with fewer than 100 employees—are exposed to serious risks that could be mitigated by a better understanding of insurance options. Key findings of the research show:

• Only 47 percent of small businesses offer heath insurance to their employees. Of those, 24 percent report changing the fee structure, deductibles or other components in the past year to offset the rising cost of premiums.
• Only 59 percent of small businesses with fewer than 20 employees have workers’ compensation insurance, which state law requires for most companies. Workers’ compensation insurance protects business owners from claims by employees who experience a work-related injury or illness.
• Only 35 percent of small businesses have business interruption insurance, which covers expenses like payroll and utility bills that often continue after a major event (e.g., a fire or storm) shuts down a company. Because rebounding from a disaster can take a considerable amount of time, small businesses need to understand this risk and the available insurance options.
• Only 48 percent of small businesses carry commercial auto insurance. The others apparently rely on personal auto insurance. However, personal auto insurance policies typically have lower liability limits and may even exclude business-related liability.
• While 71 percent of small businesses say they are very dependent on one or two key people for their success and viability, only 22 percent have Key Person life insurance, a type of policy that enables a business to weather the death of a key employee or buy out the key person’s heirs if ownership rights are involved.
• Among home-based businesses — 22 percent of the NAIC survey — 48 percent depend on their homeowners insurance to protect their businesses. However, most homeowners insurance policies severely limit coverage of business property and may totally exclude business-related liability claims.

“Insure U for Small Business represents a major commitment by the NAIC and its members — the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories — to help small business owners,” Commissioner Hampton said. “It builds on the momentum of the NAIC’s highly successful Insure U consumer education program introduced a year ago.” 

The U.S. Treasury’s Financial Literacy and Education Commission has embraced Insure U and made the program part of its National Financial Education Network.

In addition to launching Insure U for Small Business, the NAIC is expanding its efforts to help insurance consumers avoid being taken advantage of by insurance scams. Fighting fake insurance is the focus of newly updated English- and Spanish-language television public service announcements encouraging individuals to call their state insurance department before purchasing an insurance policy to confirm that they are dealing with a company or agent authorized to do business in their state.

Consumers who want to check on an insurance company before purchasing a policy or who have other questions about insurance should contact DISB at (202) 727-8000. For more information about insurance and Insure U, consumers can visit DISB’s website at disb.dc.gov.

ABOUT THE NAIC
Headquartered in Kansas City, Missouri, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and the five U.S. territories. The NAIC’s overriding objective is to assist state insurance regulators in protecting consumers and helping maintain the financial stability of the insurance industry by offering financial, actuarial, legal, computer, research, market conduct and economic expertise. Formed in 1871, the NAIC is the oldest association of state officials. For more than 135 years, state-based insurance supervision has served the needs of consumers, industry and the business of insurance at-large by ensuring hands-on, frontline protection for consumers, while providing insurers the uniform platforms and coordinated systems they need to compete effectively in an ever-changing marketplace. For more information, visit NAIC on the web at: http://www.naic.org/press_home.htm.