The Federal Reserve recently released its survey findings on the impact on small businesses throughout the United States after a record-breaking year of hurricanes and wildfires in 2017, which cost an estimated $306 billion.
The report by the Dallas, New York, Richmond, and San Francisco Fed banks examined 1,800 businesses with fewer than 500 employees in zip codes with disasters designated by the Federal Emergency Management Agency (FEMA). It found 40% of small firms in these areas had natural-disaster related losses, and 35% lost more than $25,000 in revenues. Furthermore, the report found that although 65% of disaster-affected firms cited loss of power or utilities as the source of their losses, only 17% of affected firms had the proper Business Interruption insurance at the time of the disaster.
"Small businesses are primary drivers of job growth and their ability to rebound from disasters is critical to regional economic recovery," said Claire Kramer Mills, assistant vice president at the New York Fed. In fact, small businesses employ half of private-sector workers and are the primary creators of new jobs in the United States, according to a 2015 U.S. Census Bureau study.
The Federal Reserve survey also cited that last year's storms hit minority communities particularly hard. Some 54% of Hispanic-owned firms in affected areas reported natural disaster-related losses, compared to 40% of white-owned firms and 35 % of African American-owned firms.
The storms hit lodging and retail businesses hardest. About 52% of leisure and hospitality firms and 47% of retail firms in affected areas reported natural disaster-related losses, the highest shares of all industries.
This report as well as other findings we have discussed previously reflects the need for the insurance industry as a whole to help businesses better understand their vulnerabilities and purchase the relevant coverage needed to address their risks. Business Interruption insurance, including Utility Interruption coverage, is vital for the continued success of a business. RPS can assist you in providing insurance solutions that fit your insured’s risk profile. Give us a call to find out more about our niche markets and business insurance lines.