ERGO NEXT report: High insurance adoption among new small businesses masks widespread underinsurance

A survey of 501 small business owners conducted by ERGO NEXT reveals that while new entrepreneurs are prioritizing protection earlier, many small and medium-sized businesses (SMBs) remain significantly at risk.

Key findings indicate that 82% of businesses in their first year of operation have insurance, a higher rate than the 67% reported by businesses operating for two to five years. However, coverage adequacy remains a major issue: 73% of small businesses either have no insurance or possess less coverage than required. Of those that do have coverage, 64% are considered underinsured.

Barriers to obtaining adequate protection include cost and complexity. Among businesses without insurance, 50% cited high costs as the primary reason, while 20% stated the process was too confusing. The report suggests that while economic uncertainty and rising threats, such as cyber risks, are driving earlier insurance adoption, many owners still struggle to determine the specific coverage necessary to mitigate critical risks.