Insurance For Professional Services Businesses

Industry-Wide Risks Facing Professional Services Providers 

Many small business owners are in two minds about insurance for professional services businesses. How necessary is it really? The Professional Services Industry is dynamic. Technological development and unknown external factors increase the potential of harm and risk. Disruption and resource failure or damage can seriously hamper the productivity of an industry that depends on machinery, technology and information to succeed. In an industry that is estimated to surpass $8 billion by 2022, proper security in the form of a business owners policy is a no-brainer. The greatest concern facing the industry is the potential of incurring legal liability. Insurance is essential in an industry of this nature, as the fear of lawsuits is great. Surprisingly, only 37 percent of businesses in the industry consider themselves to be adequately insured. This highlights the need for professionals to go to greater lengths in terms of protecting their livelihood.

The professional services industry includes firms specializing in the fields of law, accounting, architecture, engineering and consulting, among others. In the American context, the US professional services industry boasts approximately 900,000 firms taking home a combined annual income exceeding $1.7 trillion a year. Professional services created in excess of 9.4 million jobs in 2018. These figures are supplied by SelectUSA, a U.S. government-wide program led by the U.S. Department of Commerce.

Newsflash: Cyber Security Is A Big Deal

Reportedly 36 percent of cyber incidents such as data breaches, crime and technological failure gave rise to industry claims. However, the number of firms with cyber insurance are far and few apart. It is no wonder that regulation and compliance sets strict governance policies within the industry. 62 percent of firms rank security issues to be a greater immediate concern compared to other types of business. Outside of the office, even driving a personal vehicle during office hours creates concern as only 41 percent of professional services companies have commercial auto coverage.

 Management Consulting Firms

The management consulting sector generated the greatest income of $328 billion in revenue whilst also creating the greatest number of jobs. The whopping 265,100 firms provided employment for 1.4 million professionals last year. This is all well and good on a macro-scale. However, should your small management consultancy firm make recommendations that fail to deliver specified results, you could face a professional liability lawsuit.

Accounting Companies

The US accounting sector boasts 144,500 firms nationwide, providing jobs to 1.2 million professionals within the industry. Providing a number of financial and accountancy services, 2018 saw $180 billion in revenue generated from services offered to individuals and other businesses. This is an increase of 4 percent from the previous year. Say your firm’s network is hacked.  The resulting theft of personal and sensitive data could turn into a legal and financial nightmare.

Architectural Services

The architectural services industry generated $77 billion in revenue, also a 4 percent increase from the previous year, most of which was generated through non-residential construction. The industry mainly comprises niche firms and created 138,000 jobs last year.  What would fire damage to your equipment mean for your small business?

Engineering

The engineering services industry raked in $262 billion revenue in 2018, and saw a 6 percent increase from the previous year. Service offerings include infrastructure, power and architecture and created 738,100 jobs in the US in 2018. But, what if one of your employees sues your firm for alleged discrimination? A suit like this can be brought by past, present or prospective employees. Do you have insurance coverage to limit the financial damage to your small business?

Legal Firms

The legal services industry had seen the greatest growth from the previous year of 12 percent, and took home $327 billion in revenue. In excess of a million jobs were created nationally by its 190,700 firms. As a small professional services business, you are constantly at risk of being sued over services you’ve performed. Even if a lawsuit has no merit, defending against it can be costly.