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Small and Micro Businesses: America's Growth Engine

Summary: Risk Follows Growth for America's Micro Businesses

In the last 20 years, small and micro businesses (those with five or fewer employees) have acted as a major growth engine for the U.S. economy. Two major factors fueling the sector's growth are the rise of the Internet, which has increased access to work across industries, and the recession of 2008, which forced millions of Americans to seek work outside traditional fulltime careers. The result is that the small-business landscape of 2013 is different from that of 10 years ago, with freelancers and independent contractors making up a greater portion of all small businesses.

Many of these independent workers, however, are not aware of the business liabilities that accompany their legal status as businesses. This disconnect explains, in part, why small and micro businesses remain vastly underinsured, shouldering a disproportionate share of tort liability costs and paying a significant portion of these costs out of pocket. It also illustrates how insurance advisors can play a key role in facilitating growth in the micro business sector by educating the nation's independent workers about risk mitigation strategies and how reducing liability can help prevent unnecessary price inflation and improve client retention.

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