During Financial Challenges, Small-Business Insurance Fees Matter More Than Ever

Dennis Dix is Chief Operating Officer at Cerity, an Austin-based data and analytics start-up offering workers’ compensation insurance.

Small-business fees for things like insurance and payroll services always eat away at the bottom line, but as the pandemic drags on, business owners should be increasing their awareness of how to keep these fees under control. Fortunately, several new-model services offer significant savings for businesses in the know.

Today, small businesses can take advantage of significant cost savings when processing payroll. Additionally, worker’s compensation insurance providers could potentially save business owners big money — with the right technology, no commissions and no upfront costs. 

The Future: Direct-To-Consumer Worker’s Compensation

Like never before, small business owners are learning, evaluating and making greater purchasing decisions completely online. As consumers themselves, owners’ expectations are higher. To be successful these days, insurers cannot simply rely on their domain expertise to attract buyers. Now, they must develop an intuitive and attractive user interface that guides users through an efficient process, requiring little data input.

Insurers that embrace a digital-first lens to the customer experience can gain traction with small business owners. For example, my company uses an “outside-in” methodology that offers direct-to-consumer access through a web-based questionnaire and process that can get small business worker’s compensation insurance coverage in as few as five minutes. The direct-to-consumer approach enables small businesses to save significant money by sidestepping traditional retail channels and removing the intermediary. This approach can enable leaders to focus on growing and scaling their operations while saving money.

Pay As You Go: The New Worker’s Compensation Model

“Pay as you go” is another way that small business owners take control of costs. The cost of worker’s compensation insurance (the premium) varies depending on the jurisdiction any given business is in, as well as the nature of that business. Regardless of the industry, as headcount increases, so does the potential for injury in the workplace.

This market situation is different from a typical recession. The immediate closure of restaurants and bars, canceling all gatherings of more than 10 people and other measures are making an impact that we’ve not fully realized just yet. An injured worker in a certain sector of our economy could experience unprecedented challenges returning to work during the closures. Small businesses are looking for better ways to manage their finances as needs change. 

The concept of pay as you go is gaining momentum, especially with small business owners who need the ultimate flexibility right now. While traditional worker’s compensation plans require annual payroll estimations, upfront fees and painful year-end audits, pay as you go relies on real-time calculations. This way, business owners enjoy greater accuracy, paying only what is owed based on actual payroll data, and are able to adjust with each payroll cycle to help lower premiums. The pay-as-you-go model can better respond to the dynamics of the business, helping small businesses weather the storm.

Free Payroll Software: Ideal For Small Businesses

No single business activity provides a greater sense of security for the workforce than getting employees paid accurately and on time. That said, this critical process does not have to cost a fortune. More than ever, small business owners are looking to free online payroll software to ease the burden on their balance sheets. New services available today enable small businesses to pay their employees and freelance contractors — via direct deposit or paper checks — in a cost-effective way.

If they can capitalize on free payroll software, small business owners can not only reduce the financial burden on their businesses, but also focus more attention on the company mission. Interpreting and completing complex tax forms and calculations, recording vacation hours and churning out detailed reports can be left to the compliance experts. And to extend the savings and increase efficiencies even further, payroll software providers can form strategic partnerships with select insurance providers.

Stay Safe; Stay in Control

Let’s face it: Big insurance companies may not be focused on serving the interests of small businesses. Small business owners recognize that doing some homework upfront pays off, and it’s a good time to shop around. In addition to having free payroll and pay-as-you-go worker’s compensation insurance, insurers can provide transparency and flexibility by requiring no money down, no annual commitment and no early termination fees.

Beyond gaining control of expenses, leading small business owners are establishing and maintaining safety programs that reduce worker’s compensation premiums over time. Taking control of safety by identifying known hazards, developing policies that include work-from-home considerations, training employees and clearly communicating how to respond if an accident occurs can position that small business to be in control and drive continuous improvement.

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