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Small Commercial Insurance Market Research Available

Small Business
November 02, 2016

McKinsey & Company recently published a white paper titled Small Commercial Insurance: A Bright Spot in the US Property-Casualty Market that discusses predictors that may be of interest to firms seeking to help small businesses consider captive insurance alternatives.

The small business segment is one of the property-casualty markets experiencing growth in recent years, according to the report. Although the McKinsey & Company report does not address the question of what impact the growth of the small commercial insurance market will have on the captive insurance industry, it does provide insights into "need and behavior-based [small business] segments that are far more accurate predictors of shopping and buying preferences" of small business customers.

Following are some of the key conclusions that the McKinsey & Company proprietary research identified after qualitative interviews and a survey of a sample of small businesses with 100 or fewer full-time employees.

  • Exclusive agent insurers that have strong personal lines businesses and some small commercial lines presence are preferred over those that distribute through independent agents.

  • Small commercial represents more than one-third of the commercial market and is the fastest growing when the economy is expanding.

  • The commercial insurer share of the market is fragmented.

  • The pool of small businesses potentially willing to switch insurers "represents almost 50 percent of the market."

  • A total of 94 percent of small business insureds renewed with their existing insurer, but only one-half are "actively loyal."

  • Almost 70 percent of small commercial insurance customers are taking more control of the insurance decision making in the early stages of the process and gathering information through nonagent channels, including online.

  • More than 60 percent of people quote exclusively through agents, and 17 percent obtain quotes themselves as well as through agents. 

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