2021: Small Commercial Insurance - Weathering the Pandemic Storm


Price : $1,750.00



The small business market is a hotbed of activity. Overall, it has a healthy diagnosis, despite the effects of the Covid-19 pandemic. Overall, Conning estimates the SCM (small commercial market) segment to be $113B in direct written premiums as of 2020 year-end. This reflects growth of 13% since our last study looking at 2017 premiums. Small business continues to be the backbone of the U.S. economy, accounting for more than 90% of all domestic enterprises. Firms have continued to evolve, both before and during the pandemic, and have bespoke needs that small commercial insurers must meet, ranging from multiple distribution avenues to product needs and digital capabilities.



Table of Contents


1. Introduction 


2. Executive Summary 



  • The Small Commercial Insurance Market

  • Evolving Go-to-Market Strategy

  • Small Commercial Outlook


3. The Small Commercial Insurance Market



  • Definition of Small Business

  • The Insurance Market for Small Business

  • The Client Base for Small Commercial

  • Small Business Industry Sector Catalog

  • Where Does SBM Fit within the Total Commercial Market?

  • Summary


4. Pandemic Effect on Small Business



  • Quantifying the Impact

  • The Market’s Assessment of the Impact

  • How Did the Small Business Insurance Market Fare?

  • Summary


5. Evolving Go-to-Market Strategy



  • Independent Agents’ Continued Relevance and Refined Focus

  • Digital Agenda Moves to Implementation Stage

  • Trends in Small Commercial

  • Outlook


6. Outlook 



  • Market Challenges and Concerns

  • Small Commercial Investments

  • The Market Remains Compelling


7. Appendices


Introduction

This edition of the small commercial study includes a detailed market sizing and firmographic analysis, as well as assessment of key themes reverberating throughout the market as insurers take action to address critical needs of insureds and distribution partners. This study was driven by reviewing industry financial data and conducting in-depth interviews with insurers that cater to the small business market.


Chapter 3 provides a quantitative perspective on the market. We review the varied definitions for small commercial businesses used across the insurance industry and define the segment for the purposes of this report. Conning found that the premium represented by the small business market for year-end 2020 expanded by approximately $13 billion since our prior study (which looked at 2017 data). We also provide market share estimates for top insurers in the segment, where the market leaders have been reshuffled since out prior installment.


Moving to firmographics, Conning’s study also summarizes the key market segments driving the SCM, including industry sectors and employment data. Professional services is the largest sector within the SCM by firm and employee count, accounting for more than 20% of firms and 17% of segment employees. Other services and construction round out the three largest sectors by firms, while hospitality and health care round it out by employee count.


This study also provides a deep dive on the pandemic’s impact on small businesses. The impact of the pandemic has played havoc in the operations of many small businesses, as well as for the insurers that serve them. However, in the aggregate, the picture is not all negative. Many of the insurers we talked to reported premium growth; more noted only a small, low-single-digit percentage of customers went out of business. Strong retention, especially outside of hospitality and retail segments, coupled with strong positive rate action, have propelled the industry to growth over the past year. Driven by expansive emergency legislation, insurers eased the burden on struggling businesses with flexible payments, premium audits, and endorsement rules during the worst of the pandemic, although there are fears that continued pandemic-related threats could elongate small businesses’ struggles, especially after financial aid ended.


Overall, the small commercial market appears to be in a healthy position. Insurers of all sizes are interested in the space, driven by the belief that no clear market leader exists. Further, there are multiple avenues to take to the small commercial market, including independent agents, exclusive agents, and direct distribution.