NEW YORK–An expansion of the National Association of Insurance Commissioners’ Insure U into the small business market, announced here today, underscored the need for insurance in that marketplace.

The NAIC started Insure U, a public education program, last year. It initially focused on the consumer at various life stages: young singles, young families, established families and empty nesters.

Walter Bell, Alabama insurance commissioner and NAIC president, said during a meeting here that “protecting consumers is our primary concern.” Toward that end, the program will be introduced to local business groups, state chambers of commerce and other venues, he said.

A survey prepared by NAIC, Kansas City, Mo., in March and a discussion here among state insurance commissioners showed a need for basic health care coverage for small business in their states.

Forty-seven percent of small businesses offer their employees health insurance and 26% offers disability insurance, according to the NAIC survey, based on 501 interviews.

A total of 24% had life insurance and 21% had dental coverage, according to the survey, titled “Business & Employee Insurance Issues Among U.S. Small Businesses.”

Other findings that pointed to the need of small businesses for insurance include the following:

12% of small business owners-managers do not have health insurance coverage themselves.

22% have “key person” life insurance and 15% have “key person” disability insurance, while just 7% had both coverages–even though 71% said that they are “very dependent” on 1 or 2 key people.

55% had dropped health insurance; 18% dropped property & liability insurance; and 12% dropped workers’ compensation insurance to reduce expenses.

Only 59% of businesses with fewer than 20 employees had workers’ compensation insurance.

Only 35% had business interruption insurance.

During today’s meeting, Montana Commissioner John Morrison described the difficulty small business owners in his state have in providing health insurance to employees and detailed Montana’s solution, which includes use of money from a tobacco suit settlement to make health care available.

In talking with small business owners, according to Morrison, “most said that they could pay something, but not market cost.”

During a meeting with Montana residents, the owner of an auto garage said that his company was going bare on coverage because they could not afford health insurance, Morrison said. But the owner believed he could afford $100 a month on each of his 4 employees and his employees could afford $50 a month, according to Morrison.

So over $7,000 was “left on the table,” the commissioner said.

Montana’s insurance initiative is helping to bridge the gap between what businesses can afford and what is available in the marketplace, he continued.

Kansas is providing tax credits over a 3- year period to help small-business startups, according to Sandy Praeger, Kansas insurance commissioner and NAIC president-elect.

Health insurance “is a big hit to a new business’ bottom line,” said Praeger.

The need for insurance and education about insurance was juxtaposed against the importance of small businesses to the U.S. economy.

The Small Business Administration said that in 2005 there were approximately 25.8 million small businesses of 500 or fewer employees, according to Cathy Weatherford, NAIC executive vice president and CEO.

These businesses represent 99.7% of all employer firms, employ 50% of all private sector employees, pay more than 45% of total U.S. private payroll and generated 60% to 80% of net new jobs annually over the last decade, according to Weatherford.

Insure U for small businesses is being launched this week, which the Small Business Administration has designated Small Business Week.