2019: Small Business Insurance - Competition and Innovation



Price : $1,750.00



Small business has become big business for the U.S. insurance industry. Small businesses account for more than 90% of all firms, and the opportunity to address the needs of the segment is drawing increasing interest from traditional insurers and from innovative startups. Conning’s Strategic Study summarizes insights developed through an analysis of industry and NAICS data and in-depth interviews with insurers focused on the small commercial insurance market. This study assesses market size and industry segments and includes an exploration of the increasing competitive intensity in this market, along with the specific factors driving the interest of both traditional competitors and of new entrants.

1. Introduction 

2. Executive Summary 

3. The Small Business Insurance Market 

  • Definition of Small Business
  • The Insurance Market for Small Business
  • Where Does SBM Fit within the Total Commercial Market?

4. SBM for Insurance Getting Crowded and Complex 

  • Traditional Competitors Fortifying Their Position
  • New Competitors Emerging
  • The Market Is Getting More Complex

5. What Will It Take to Succeed? 

  • Critical Capabilities
  • The Market Is Changing
  • Are Insurers’ Investments Responsive to These Anticipated Changes in the Market?

6. What Next? 

  • Disruptive Competitors
  • The Economy
  • Commoditization Pressures

Appendix 

A. The Small Business Market Landscape

B. Small Business Market Premiums

C. Small Business Firms

D. Small Businesses by Industry Sector


Introduction

Small business has become big business for the U.S. insurance industry. Small businesses account for more than 90% of total firms; the opportunity to address the needs of the segment is drawing increasing interest from traditional insurers and from innovative startups.

Small businesses are a key driver of job creation in the economy, but are also the most volatile segment in terms of survivability. Insurance plays a critical role in promoting the growth of startups and small businesses, helping to protect against unpredictable risks, while allowing the entrepreneur to focus on business risks. Those insurers participating in the SBM (small business market, also called small commercial market) are focused on improving the process by which startups and small businesses get coverage—making it easier for this critical element of the economy to function.

The market for small business insurance is becoming increasingly competitive, drawing interest from an array of insurance and noninsurance firms. One of the compelling aspects of the small commercial market is the opportunity to innovate. While not a new segment, there is still the notion that small commercial is “ripe for the taking.” This market is generally not well understood, and there is a natural tension between the needs of the small business owner and those of the agent/insurer. The customer wants ease of use and quick turnaround, but also has significant service and education needs. The agents do not have time to work on a smaller premium account if it does not have rapid turnaround. The chance to create ways to address this tension presents a significant opportunity.

This report analyzes the changing dynamics of this market, estimates the size and growth of the SBM sector, and examines the differing approaches that participants are taking to address the needs of this critical segment.

Conning’s study summarizes insights developed through analysis of insurance market financial data and from in-depth interviews with insurers focused on the small business insurance market. Chapter 3 defines the small business insurance market and estimates the premium volume and relative market shares of the SBM insurance market leaders. We found that the premium represented by the small business market in 2017 has expanded by approximately 5% since our prior study (which looked at 2015 data).

The study concludes with a discussion of risk and strategic considerations for market participants as the SBM insurance sector evolves.