Small businesses reluctant to file claims

Oct. 28, 2024 — MOST SMALL businesses in Canada do not file crime-related insurance claims because they worry about driving up their premium rates, new research shows.

The Canadian Federation of Independent Business said it found in a survey of members that only 15% said they always file insurance claims when they experience community safety issues. Businesses in professional services and hospitality were the least likely to do so, at just 6% and 11%, respectively.

The CFIB said in a report on the survey titled ‘Broken windows and broken trust: the impact of rising crime on small business’ that 82% of the respondents cited concerns about potential increases in premium rates as the reason for their reluctance to file a claim, 40% also said it was because filing is a time-consuming process and 29% cited the complexity of claim requirements.

The federation said it has found the cost of insurance is a rising concern for small businesses.

The CFIB noted that in the September edition of its Business Barometer survey, 68% of those responding said they consider insurance a top cost concern — which is up from a historical average of 49%.

It found that while 84% of businesses had not filed an insurance claim in the last 12 months, half of them experienced an increase of 10% or more in at least one of their insurance premiums over the same period.

“This suggests that many businesses are already dealing with large increases in their insurance premiums and are reluctant to turn to their insurance policies for crime and safety issues for fear of even greater increases,” the CFIB said.

It said many operators are struggling to secure or maintain coverage, with nearly one-fifth of small businesses currently uninsured for crime and community safety issues.

The federation also found 20% of small businesses reported that when renewing their commercial insurance coverage they had no choice but to stay with their current provider due to limited options.

“To address this, governments must lower barriers to entry for insurance companies and encourage competition and diversity within the industry,” the CFIB said. 

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