Tips For Small Business on how to better manage business risks

Christine Haughney Dare-Bryan:

Welcome to Small Business Lifeline, Crain's podcast to navigate the coronavirus crisis. My name is Christine Haughney Dare-Bryan and I am an editor with Crain Communications. There are still so many risks with reopening and running a business in the world we live in. So today I'm going to take just 10 minutes of your time to offer some small businesses specific tips on how to manage all the risks that they're facing right now. We're first going to head to New York and talk to an insurance industry veteran about addressing some of the biggest fears that he finds small businesses are facing. And we're then going to head to Florida to talk to a major insurer about specific ways his firm has helped his clients mitigate risk, and hopefully, this will all help your business as well.

Tom interview start at 7min25

Full Transcript:

Greg Dasher is vice president of small business underwriting at CNA, and he's based near Orlando in Florida. Greg manages about the company's 50 small business underwriters and has policies with over 100,000 small businesses that employ less than a hundred workers each. So he's here and has some great tips to share about what he is learning from the small businesses that his company is working with. Greg, it's great to have you on our show.

Greg Dasher:

Thanks, Christine, it's great to be here today.

Christine Haughney Dare-Bryan:

Tell us about the small business owner you worked within California on how to manage what would seem to me to be a small risk.

Greg Dasher:

We had barbershop come to us, and they were considering cutting hair and styling hair on the sidewalk. And it seemed like a simple question. All they wanted to know is are they covered? Our team, working with their agent said, "Well, you are covered. There's not an issue with that. But there's a couple of things you need to think about. One, do you need a permit? Is the city going to want to know that you have proper insurance and add them as an additional insured?" So they did check into that, and that was true, that you would need a permit and they would need to be an additional insured. So they thought about it more, and they thought, "There's no science to COVID around if you're blowing someone's hair, does it spread it or not."

But we talked through that with them and they made the decision, "You know what? We're going to just keep staying inside of the barbershop and not go out on the sidewalk." And we helped them to make a critical decision around taking on how much risk as a small business owner.

Christine Haughney Dare-Bryan:

That's very interesting because I would think it would be almost safer to be outside than inside.

Greg Dasher:

Yeah, it seems that way, and it may have been fine, but it's the additional steps they have in jump through to make sure that city's happy with what they're doing, and they're small business owners, so everything they have to do takes away from their focus of cutting hair. In essence, they ended up using the inside of the barbershop and actually spreading out there. So it worked in their favor and then they didn't have to add the city as an additional insured.

Christine Haughney Dare-Bryan:

Have you advised clients who are trying to cut costs? I'm talking to so many small businesses right now and we're just trying to see what costs they can cut here and there.

Greg Dasher:

We have a perfect example. One of our insured, it's a mailing and addressing company in Texas, called in and they wanted to cancel their workers' comp insurance. They were trying to find a way to save money during this downturn in the economy due to COVID. And it sounded good as a small business owner. But the problem with that is they need to have insurance for their workers. One, it's required and another, you don't want your workers getting hurt on the job and somehow not having coverage because that's not a place you want to be as a business owner.

But we talked them through a different type of payment plan that's called work comp pay as you go. And what it does is if you have n employees and that amount of payroll, that's how much you pay your percentage for work comp premium. If you only have four employees, you pay less that time period. So it's more cyclical for when an insured is growing or shrinking instead of paying the set amount of premium. It actually was a solution for them. They were so happy because their premium went down because their payroll is down. Then once they grow again and once the economy takes off, they'll be able to change it again. So it's probably the best solution for that and businesses like them at this time in the economy.

Christine Haughney Dare-Bryan:

Wonderful. Now, so many businesses I'm talking to are saying they'll expand their business right now by offering delivery. What's your take on stepping up delivery services for customers?

Greg Dasher:

It depends on the type of customer. We had one come to us out of Tennessee with a very similar question. They were a small deli. They didn't have a lot of employees. And they said, "Hey, we're looking at doing delivery, and we want our employees to go ahead and use their cars here in Tennessee and then deliver our subs." And it sounded good, but then we started walking them through. Have they been trained in delivery? How do they drive? All of the things that they need to start asking questions. Do you really want your employees on the road?

So we said, "What about if you have a pickup window and you do curbside pickup?" And they said, "Well, we didn't think about that." So we worked with our risk control team and we showed them a way to set up where they were in the parking lot and on the edge of their deli, people could come and pick up their subs. It actually became a better solution for them, because as COVID and where we've been going through with COVID-19, if you've noticed, a lot of restaurants ended up with a curbside pickup, and that became very popular and it actually helped them, and it ended up being the best solution for them because they still got an increase in sales and it worked through the time period that we've been going through. And then they didn't have their employees who weren't trained going out on the road and delivering sandwiches.

Christine Haughney Dare-Bryan:

Greg Dasher, it's been great having you on our show.

Greg Dasher:

Thank you. Have a great day.

Christine Haughney Dare-Bryan:

Tom Pegues is the founder of Insuri and former global head of risk management at Dun & Bradstreet. He has more than two decades of experience helping large companies manage risk and navigate insurance issues, and he started Insuri in may to now help small businesses and entrepreneurs get affordable access to top quality advice and information about risk management. He's been working with small business clients, mainly in New York City and Arizona over the past few months. Tom, it's great to have you on our show.

Tom Pegues:

Thank you for having me.

Christine Haughney Dare-Bryan:

So let's talk about one of the biggest fears your clients have right now. What do they do if a worker gets COVID?

Tom Pegues:

That is the biggest fear. Right now, it's still uncertain whether workers' compensation coverage will be granted to the employees of the office. Currently the workers' compensation coverage is flu viruses and colds. Many governors around the country have extended workers' compensation coverage to include essential workers, including health care workers. But the coverage is not for all employees.

Christine Haughney Dare-Bryan:

If I'm a small business and my workers are not eligible for workers' comp, what do I do as I get ready for the fall and a possible 'nother wave?

Tom Pegues:

It is important to get your PPE in order to carry you through the fall. Make sure your office is ready with your dividers, your hand sanitizers. Encourage all your employees to wear a mask. Use flexible working schedules. Have a policy in place for testing. There's talk about giving healthcare insurance to frontline workers as well, so these are some of the things that you can use in order to get ready for the fall.

Christine Haughney Dare-Bryan:

What's the second biggest fear you're hearing about from small business clients right now?

Tom Pegues:

They are really worried about cyber liabilities in a work from home environment. They're also concerned about the productivity of their employees. I have a New York state real estate developer that just recently upgraded their systems to protect many of their employees from working from home. They are also incorporate several different network monitoring software to prevent employees from downloading unauthorized files, to prevent viruses from spreading. It's really a big concern, as you know that cyber liability breaches have been very common in the past. Currently, some of our clients have also expressed that cyber extortion has been a big issue, where cyber hackers have been logging their computers and holding their system hostage until they pay up. So these are just some of the things that the clients are facing while having their staff work from home.

Christine Haughney Dare-Bryan:

What are some small changes I can make as a small business owner when it comes to cybersecurity?

Tom Pegues:

The best thing to do at this point in time is to take a very proactive approach on a very basic level. Look at the amount of time the computer screen goes into an inactive phase before login credentials pop up. This is important to ensure that while the employee is away from their computer, no one can gain unauthorized access.

Christine Haughney Dare-Bryan:

Got it. Now, there's also been a lot of talk about business interruption insurance through COVID. A lot of small businesses that said to me they have not been happy about how things worked for them and how they have not been compensated. What do you think is going to happen going forward?

Tom Pegues:

This is a hot topic, especially in the litigation arena. Although it's very rare, there are some policies out there that are unclear or silent as it relates to business interruption in regards to COVID-19, and these policyholders, small business owners, they are litigating against the various insurers. One of the great things about this particular policy language is because usually, the small business owners do not have any input in drafting the insurance policy language. So I believe that will work in the favor of the small business owners as the court decides these lawsuits.

Christine Haughney Dare-Bryan:

So it sounds like we might have some good news for small business owners going forward.

Tom Pegues:

I believe so, and I hope so because they need all the good news that they can get at this moment.

Christine Haughney Dare-Bryan:

I agree completely Tom Pegues with Insuri, it's been great having you on our show.

Tom Pegues:

Thank you for having me.

Christine Haughney Dare-Bryan:

Thanks for listening to Small Business Lifeline. This has been Christine Haughney Dare-Bryan with Crain Communications. Please subscribe to us on your favorite podcast networks. And if you have story ideas, please email me cdarebryan@crainsnewyork.com. We'll be coming to each week with more tips on how small businesses can still survive through this pandemic. Have a great week.