Survey: Small Cos. Less Prepared For Disasters

Survey: Small Cos. Less Prepared For Disasters

NU Online News Service, June 5, 4:06 p.m. EDT?Small companies are less prepared than larger firms to withstand natural disasters, even though they are just as concerned about the impact of catastrophes, according to a Hartford Financial Services Group Inc. survey.

The Hartford's research involved telephone interviews with 225 companies of varying sizes. It found that less than 30 percent of companies with three to 20 employees have a plan to protect their businesses from a natural disaster.

By comparison, 50 percent of the companies with 21 to 50 employees and 62 percent of companies with 51 to 500 workers have such a plan.

Jim Ruel, senior vice president of commercial insurance at The Hartford, warned that 40 to 50 percent of companies that experience a disaster but have no protection or recovery plan in place never reopen their businesses.

Mr. Ruel added that small businesses are especially vulnerable, since they usually have a single operating facility where "all their records, merchandise and equipment are stored."

He noted that, fortunately, the likelihood of a tornado, hurricane or flood affecting a business is very low, with only six percent of survey respondents reporting that they had experienced a disaster in the past three years. "But this low incidence doesn't mitigate the need to be prepared, especially since one incident can wipe out a company."

Companies should protect themselves by checking with their insurance agent to ensure that they are properly covered and are taking precautions to minimize damage, Mr. Ruel advised. "The location and types of goods or services a business provides determines the insurance protection it needs," he said.

Additionally, companies also need to consider how a disaster can affect their income. "If a business can't provide goods or services because its roof is being repaired, the loss of income can drive it out of business. Coverage for loss of income can help a business survive this reconstruction period," Mr. Ruel said.