Companies in the already crowded small-business commercial insurance industry have something else to worry about — the big dogs increasingly moving onto their turf.
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Companies in the already crowded small-business commercial insurance industry have something else to worry about — the big dogs increasingly moving onto their turf.
So says a new report from Conning, a Hartford-based investment management company that serves the industry.
Conning said there’s growing interest from big property-casualty insurers like The Hartford and Travelers Cos. in small-commercial customers, defined by Conning as businesses with $50,000 or less in annual premiums.
Those companies are already in the small-commercial market, of course, but several recent significant deals show they want to grow their footprint, Conning said.
For example, The Hartford announced last February it would acquire Farmers Exchanges’ small-commercial insurance line, branded as Foremost, which had approximately $200 million in annual premiums at the time.
In mid-2017, Travelers paid $490 million to acquire United Kingdom-based Simply Business, which offers small-commercial policies online and reported 430,000 “microbusiness” customers at the time of the deal.
Conning estimates that the crowded small-commercial market — where market-share leaders own just 5 or 6 percent of customers — has grown over 4 percent, to $100 billion, in the past few years.
That, along with more competition in their traditional business segments, is increasingly pushing larger insurers toward the smaller end of the market, where Conning said new technologies can make smaller clients a more worthwhile target.
“With different firms applying different approaches to reach this market, we see small commercial developing as a key competitive laboratory that will test some very different
business models,” Conning said in its new report.
And while there has been much buzz about the potential for the evolving insurtech industry to upend the traditional insurance business model, Conning believes those companies and their product offerings are more likely to help, rather than disrupt, agents and insurers, at least in the near-term.
