Middle Market business owners eye expense cuts if recession occurs
The direction of the economy and rising inflation have been prominent topics throughout the year.
Recently, Nationwide surveyed middle market business owners about their economic outlook and their plans for protecting their operations.
We found that most middle market business owners (58%) have a positive outlook on current business conditions in the U.S. overall. However, there is a considerable amount who plan to trim costs as budgets are squeezed.
In the past 6 months, some middle market business owners have looked for ways to cut expenses (40%) or have paused hiring (33%), but many are considering scaling back their insurance coverage if the country enters a recession.
While roughly a third (32%) of middle market businesses have increased coverage and/or limits over the past six months, the vast majority (82%) say they would be at least somewhat likely to decrease their business’s current insurance coverage or limits as a way of reducing expenses if the country enters a recession in the coming months.
You can read more about our findings here, and you can get details about our survey results here.
Action you can take
Updating sales and/or payroll information based upon current business results supports a more appropriate premium for general liability and workers’ compensation coverages. Reducing coverages limits and building values to limit expenses could have unintended consequences if done without seeking the advice of a commercial insurance professional.
It’s important to have conversations with accounts about the need for adequate coverage limits and to insure to value based upon today’s environment. You can share this graphic with customers to help show them where prices are increasing and what’s driving inflation.
In addition, we would like to provide talking points you can use alongside the infographic when explaining property cost increases with customers:
- The largest spike in construction material costs in 50 years (22% increase this year)1, pandemic-related supply chain issues2 and historic weather severity3 are driving increasingly high property costs.
- Because it’s so much more expensive and time-consuming to make repairs4, policyholders are paying more out of pocket after a loss if they haven’t adequately adjusted their coverage limit.
- Let’s review your policy details and coverage limits to ensure you are fully protected if a loss occurs to your property given the rising costs.
- In the meantime, expert consultants and resources from Nationwide’s Loss Control Services can help mitigate risk in the first place to avoid costly losses and disruptions to your business.