In a fragmented and challenged market like commercial insurance, COVID-19 related concerns have added an unforeseen level of complication. The negative effect on small businesses – and the subsequent drop in commercial insurance shopping – is not limited to the onset of COVID-19, but remains ongoing. At the end of April, for example, 89.9% of businesses reported a moderate to large negative effect from COVID-19 on their business, though this number has since improved to 75.3%.*

In addition, the level of impact is not consistent across all types of small businesses. As we’ve seen in the media the largest negative impact occurred with Accommodation & Food Services (63%), followed by the Arts & Entertainment industry (60%). Other industries, however, are much less affected, with Utilities, Finance, Insurance and Construction among the business categories showing little to no effect.

The chart below shows the industries that reported the largest negative effect as well as little or no effect from COVID-19 at beginning of October 2020:

Source information: Census Bureau Small Business Pulse Survey
** Small Businesses = <500 Employees / >$1000 receipts

While Insurance is one of the lesser affected industries overall, business insurance for these varying businesses is showing some dramatic differences. Business Insurance New Business Trends showed the sharpest decline (29% compared to Pre-COVID) in mid-April, after many states launched shelter in place orders. Since that time, the national average has rebounded to approximately 6-12% (for the last 2 months), down from 2019.

*New Business Volume Index = Calculated each year as of March 8th
* July 5, Sept 6 & 13: Holiday Spikes
*Source: LexisNexis Risk Solutions Internal Data

While a national average of 6-12% may seem like a minimal decrease, the effects are dramatically different industry by industry. We’ve all seen the news and experienced first-hand the devastation the pandemic has caused the restaurant industry. Many establishments have closed their doors, and others are fighting to stay open by offering curb-side pick-ups or outdoor dining tents to accommodate social distancing measures. But this can be a sharp contrast to others that appear to be not only surviving but potentially thriving, such as Specialty Trade Contractors, as seen in the chart below.

Source: LexisNexis Risk Solutions Internal Data; Index for each year to March 8

Unfortunately, there is currently no end in sight to the impact COVID-19 will have on businesses, and many industries expect to experience continued effects on their businesses for the next six months. Here are some of the industries with the largest expected impact:

  • Accommodation & Food Services: 63.0% Overall Effect / 61.6% Expected > 6 Mo
  • Educational Services: 58.2% Overall Effect / 65.6% Expected > 6 Mo
  • Arts & Entertainment: 60.0% Overall Effect / 65.4% Expected > 6 Mo
Source information: Census Bureau Small Business Pulse Survey
** Small Businesses = <500 Employees / >$1000 receipts

LexisNexis® Risk Solutions is committed to supporting the insurance industry with timely reporting of critical metrics and will continue to monitor these trends through 2020 for Commercial Insurance. For more information, reach out to your LexisNexis Risk Solutions Commercial Vertical Account Manager, call us at 800.458.9197, or email us at insurance.sales@lexisnexisrisk.com.