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Fla. businesses bemoan skyrocketing insurance costs

Small business owners in the Jacksonville, Fla., area are feeling the pinch of skyrocketing property insurance premiums and more than half of them said they will need to pass those costs on to consumers, according to a recent survey.

More than 82 percent of survey participants agreed that the increase in insurance premiums would have a significant or moderate negative effect on the overall business climate in Florida.

The increasing cost of property/casualty insurance – and businesses’ ability to afford appropriate insurance – places a damper on the outlook for positive business performance in the Greater Jacksonville area over the next six months, according to the fourth in a series of surveys by CenterBank of Jacksonville, in collaboration with the University of North Florida’s Small Business Development Center.

Nonetheless, findings project a perception of status quo or slight improvement over the next six months as job growth, capital investments and revenue vigor continue to rise.

Economics Professor Andres Gallo of UNF’s Small Business Development Center drew respondents from an established database of 25,000 small businesses in Jacksonville valued at $5 million or less.

Gallo said the degree of competition among smaller businesses is so fierce that many owners have to weigh the effects of raising prices to compensate for higher insurance costs against pricing themselves out of their market and potentially losing their business.

“If you don’t have a significant control of the market, you don’t have the ability to be flexible in your pricing,” Gallo said.

Veniard said the group found the topic of rising insurance costs pertinent enough to highlight in the latest rendition of the survey. Previous surveys included questions on disaster planning and economic incentives.

“The rising cost of insurance premiums is becoming quite a small business problem,” Veniard said. “We’re hearing from our customers – almost daily – that their insurance premiums are jumping anywhere from 300 percent to 500 percent. They expect the higher costs to impact them significantly.”

Veniard said the added burden on small businesses could also affect the type of loans made available to them as well as the cost of a loan. He said for businesses that may be struggling or operating on slim margins, a loan could be too risky for the bank to take on, demonstrating the repercussions reverberating throughout the state caused by escalating premiums.