Gov. Hochul must protect small businesses from skyrocketing insurance costs. Here’s how.

With the holiday shopping season in full swing, it is crucial to remember that the backbone of New York’s economy is small businesses. They are often family-owned and operated, generational, and are a major source of employment for residents and communities across the Empire State. The last few years have seen both extensive small business closures and new business creation from entrepreneurs as diverse as the residents of our state. For these small businesses to thrive, politicians must recognize the challenges our entrepreneurs face. Local business owners grapple with worker shortages, inflation, supply chain issues, and regulatory uncertainty, not to mention the strength and resiliency it took to weather COVID-19. And they continue to navigate the pandemic’s lingering effects.

Added to all of these challenges is the threat of litigation and the crushing insurance costs associated with New York’s incredibly hostile liability environment. Unfortunately, the New York State legislature will soon force Gov. Kathy Hochul to sign or veto another fatally flawed bill with the potential to substantially increase insurance costs — an increase that will be detrimental to the well-being of small businesses, the healthcare system and each and every New York resident. The Hochul Administration rejected an almost identical bill once before and this latest proposal should be vetoed as well.

Research from the Perryman Group finds that excessive litigation costs are a drain on the U.S. economy — a loss in economic output amounting to approximately $1,300 per person. In New York, where the legal climate is especially hostile due to the state’s permissive civil liability laws, that number is more than $1,800 per person. Crippling legal costs drain resources from small businesses that could be reinvested to spur growth and create jobs. The top beneficiaries of our out-of-control litigation environment are the state's politically connected trial attorneys. Personal injury attorneys are allowed to collect up to 33% of each case they win, and they take their full share of the payout almost every time.

The fear of legal action looms large over family-owned businesses. Beyond the financial strain, the time and energy devoted to navigating unnecessary litigation can divert the focus of small business owners from their core mission — serving their customers and their communities. There are close to 500,000 small businesses with employees in New York. These businesses employ half the state’s private-sector workforce, nearly four million New Yorkers, and their production accounts for nearly half of the state’s GDP.

In a recent NFIB survey, many small business owners say they are more pessimistic about the economy and the future of business conditions. As insurance and other costs rise, small businesses see their slim margins shrink further while also contemplating  passing these burdens along to consumers in the form of higher prices. Enacting new laws that expand liability will only make it more difficult to encourage entrepreneurs to realize their dreams of business ownership here in New York.

Supporting small businesses requires a multi-faceted approach that goes beyond political rhetoric and posturing. Lawmakers must engage with business owners, understand their challenges, and develop solutions that foster an environment for growth. A real effort is needed to streamline and simplify regulatory processes. Politicians must work to reduce the bureaucratic hurdles that disproportionately affect small businesses. At the end of the day, let New York’s small businesses do what they do best — owning, operating and growing their business to keep the state’s economy going and powering our neighborhoods.

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And when it comes to bills like the liability expanding proposal lawmakers will soon send to Gov. Hochul to sign or veto, the process should be a partnership. Policymakers need to be thoughtful and collaborate with the small business community to craft legislation that avoids crushing small business owners with debilitating costs.

Hochul must once again do the right thing and veto S.6636/A.6698, sending a clear message to the Legislature that despite the good intentions involved, lawmakers have a responsibility to properly study how the bills they pass will impact the economic well being of our local entrepreneurs. Small businesses, the very bedrock of the state’s economy, cannot afford yet another cost hike like the one this bill will unleash.

Ashley Ranslow is the New York state director of the National Federation of Independent Business, or NFIB.

This article originally appeared on NorthJersey.com: NY small businesses can't bear growing insurance costs. Hochul must act