2020 has been a difficult year for small businesses. COVID-19 has led to government-mandated shutdowns and reduced foot traffic, leaving small businesses struggling to get by. Many have not been able to survive the financial hit. Nearly 100,000 businesses permanently closed after periods of government mandated shutdowns, according to reporting from Fortune.

During these times of uncertainty, many small businesses are turning to their insurance agents and brokers to figure out how they can reduce their costs and cover losses. 

While business interruption seems like the obvious line for these concerns, small businesses are also looking to see how changes to their workers’ compensation policies can help them save money. 

Changes to staff size and payroll could affect the amount policyholders need to be paying into their workers’ comp policies. Additionally, some businesses may have changed the roles of their workers, putting them at risk for injuries they would not have faced previously, which could affect their policies.  

“We realized that our main focus and the focus of our agents was going to be basically saving small businesses,” said Ray Wise, SVP and chief sales officer at EMPLOYERS, a workers’ comp insurer that specializes in small business. 

“What small businesses are concerned about in all of this uncertainty is ‘how do I survive? How do I get to the other side of this?’ ”

As the COVID-19 pandemic enters its second wave, small businesses need to prepare for months of reduced business and possibly another round of shutdowns. Owners will need to evaluate the effects that the pandemic could have on their businesses and their workers. Insurers can help them prepare. 

“It’s critically important right now, as America’s facing this second wave, that small businesses do engage their agents as trusted advisors,” Wise said. 

Wise’s number one tip for small businesses is to call their workers’ comp insurers and brokers and have a conversation about what they can do with their policies to make sure they can survive the pandemic.

Here are four conversations he recommends having before the New Year. 

1) Tell Them How Your Payroll Has Been Affected

One of the first things small businesses should discuss with their workers’ compensation agents or brokers is how their payroll has been affected by the COVID-19 pandemic.

Payroll plays a major role in determining workers’ comp premium sizes. Insureds with fewer workers pay less in their premiums. If your business has had to lay off or furlough staff, you may have experienced a premium reduction. 

“Your payroll estimates may have changed quite a bit, and they may change even more since the pandemic started and as you’re contemplating the new year and getting to the other side,” Wise said. 

“You need to communicate how your payroll has been affected so far, and then think about how your payroll may be affected in the first six months of the year, or the full year.”

Payrolls haven’t just dropped, however. Some industries, like delivery services and grocery stores have actually had to hire more workers, increasing their payroll and workers’ comp expenses. 

“We have some industries, some businesses like restaurants and hospitality … where the payroll’s dropped dramatically. We have others like grocery stores or some maybe delivery operations where it’s gone up,” Wise said. 

2) Know You’re on the Right Billing Plan

Once small businesses have considered the effects the virus could have on their payroll in the coming year, they’ll want to work with agents and brokers to make sure the billing plan for their workers’ comp policy suits their needs. 

Workers’ comp policies can be paid for in a variety of ways. Insurers offer annual, biannual, quarterly or even pay-as-you-go plans that allow the policy to more accurately reflect payroll.

While their are many different billing plans, the main difference for policyholders will be knowing whether they’re on an annual lump sum or pay-as-you-go plan. Pay-as-you-go options allow small businesses to avoid putting down a large amount of money at once and can help spread the payments out using a schedule that mets the business’s needs. 

“There may be a situation where you may want to have a pay-as-you-go billing plan, up or down, your bill matches with the payroll for that month,” Wise said.  

Employers that have seen a lot of volatility in their payroll in 2020 may want to switch to quarterly or pay-as-you-go plans for 2021 while those with relatively stable payrolls might opt-for biannual plans. 

3) Assess Pandemic Related Operational Changes

Payroll changes may have left businesses with fewer employees, and as a result, they may have employees working in different roles than they held previously. Restaurants and other businesses that have had to pivot business models may have employees working in new roles as well. 

All of these changes could affect a small business’s workers’ comp policy. If employees previously worked as waiters or bussers and are now working as delivery drivers, businesses need to make sure they’re covered for risks related to vehicle accidents under their workers’ comp policies.

Having employees change roles could expose them to new risks and consequently policy rates could increase. 

“If you have people doing different things than they were when you first wrote your workers’ comp policy, that could have a material change in rates or exposures,” Wise said. 

To make sure that workers who have recently changed positions are covered, businesses should consult with their agents or brokers to make sure everything adheres to existing policy guidelines. 

“An agent is going to be best at knowing whether a carrier might be comfortable with that exposure or not,” Wise said. 

This is especially true for delivery drivers. If a restaurant is using a service, like DoorDash or Grubhub, to provide delivery rather than in-house drivers, they’ll have different workers’ comp requirements. Drivers working for a service are often classified as independent contractors and as such don’t receive workers’ comp benefits. 

These types of arrangements can create confusion for business owners about when someone is and is not covered under a workers’ comp policy. Consulting an agent or broker can help clear up these issues. 

“Those are conversations why I think an agent needs to be in the middle of it because it’s not always cut and dry,” Wise said. “That’s where the agent can come in and say, ‘Hey, this may be a different classification.’ ” 

4) What Are the COVID-19 Rules and Regulations in Your State?

In the midst of this complexity, states are adopting ever-changing requirements and regulations to help curb the spread of COVID-19. 

“A lot of these rules and regulations came up fast,” Wise said. “[Small business owners] can help guide the conversation with the question, ‘Is there anything that I should be aware of as a small business owner agent that would affect my workers’ compensation policy?’ ” 

In addition to changing COVID restrictions, small businesses that received PPP loans or other forms of government relief may have to meet certain requirements. Small businesses may have a difficult time keeping track of these ever-changing regulations. That’s where an agent or broker can step in to help clarify.

“Our agents should know what the rules and regulations around workers’ comp are,” Wise said. “The average small business owner isn’t really going to understand that, that’s why you need a trusted advisor.”

Have These Conversations Early 

As the old adage goes, knowledge is power. In that vein, Wise recommends small businesses have these conversations with their workers’ compensation agents or brokers either before the year ends or early on in the new year. “The earlier you can get this knowledge the better,” he said.

If small businesses aren’t ready to have these conversations so soon, Wise recommends “definitely having these conversations well before your policy expiration date.” But he emphasized that sooner is better.

Having these conversations right now can help small businesses sort their financials for another year that is likely to be affected by COVID-19. Even as the vaccine roles out, social distancing guidelines will still be in place and small businesses — especially in the retail and restaurant sectors — will likely only be allowed to have reduced occupancy in their establishments. 

In these situations, working with an agent or broker to make sure you have an appropriate billing plan and that your premiums reflect your business’s payroll can be a money-saver. 

“I would absolutely, absolutely have this conversation now. It might make all the difference in the world,” Wise said. &