My Comp Insurer Is? Umm...

Small companies are buying workers' compensation insurance coverage without understanding how the coverage works, what they get for their premiums, or why they continue coverage with a particular carrier, according to a national survey.

The findings were made in a poll conducted by Reno, Nev.-based Employers Insurance Company, which found that 14 percent of small business owners and executives could not name their insurer.

In the survey, 13 percent admitted they do not understand how workers' comp insurance protects employees with work-related injuries, or how their coverage can protect their small business' bottom line against catastrophic claims.

A significant number of small business decision-makers reported they rely on state funds in the 12 states that operate them, Employers said.

Among survey respondents dissatisfied with their workers' comp carriers, more than half use state funds, said Employers.

The firm said survey results indicate that state funds appeal to many small business decision-makers who have little knowledge in terms of workers' comp insurance and may be the insurer of convenience.

A related survey result indicated that 18 percent of small business owners who reported having selected a new workers' comp carrier within the last policy renewal period were unable to recall the provider they switched to.

The survey by Employers found seven out of 10 small business owners, partners, presidents and chief executive officers depend upon their insurance agent to explain workers' comp coverage and pricing. At the same time, 58 percent of these decision-makers reported they consider choice of a workers' comp carrier a "hands-on" responsibility that is theirs alone.

First-quarter 2008 results of the Small Business Market Monitoring Program were released by Employers in collaboration with Profile Marketing Research Inc. of Lake Worth, Fla.

Data for the survey was collected through telephone interviews during the period December 2007 through January 2008 from a nationally representative sample of 400 small business decision-makers at companies with five to 49 employees. Overall survey results, Employers said, have a plus or minus 4.89 percent margin of error.

A quarter of all small business decision-makers who identified themselves as policyholders of a company of Employers, America's small business insurance specialist, said they consider themselves experts when it comes to understanding this vital aspect of small business insurance needs.

Price remains a deciding factor, with 75 percent of decision-makers identifying it as their primary motivator in choosing workers' comp coverage. A total of 69 percent ranked their carrier's financial strength as the second most important factor.

A total of 60 percent named claims handling as highly important in protecting small business operations in the event of an employee injury, and in helping to return valued employees back to work as soon as they are able.

Employers said it was significant that the single most important source for small business decision-makers interested in learning more about workers' comp coverage remains their insurance agent.

A 66 percent majority of respondents reported turning first to their agent when in search of workers' comp insurance information. Twenty-two percent identified the Internet as their secondary information source.

Small Business Market Monitoring Program is a semiannual survey measurement of workers' comp insurance industry trends, conducted by Employers.

Additional information and survey results are online at http://www.employers.com.

Employers Insurance Company of Nevada and Employers Compensation Insurance Company offer workers' comp insurance and services.