Opportunities exist in serving middle-market businesses

Property/casualty insurers and their agents have a sizable opportunity to serve middle-market businesses, a Conning report said.

Conning’s 2025 Middle Market Study reports that the direct premium written opportunity in the segment ranges from $153 billion to $168 billion.

Middle-market businesses are described as those employing between 50 and 999 workers. The vast majority (73%) have fewer than 150 workers. Each firm generates between $10 million and $1 billion annual revenue. Firms with fewer than 150 workers generate roughly only 37% of revenue.

“With just over 200,000 businesses that could fall into Conning’s definition of a middle-market firm, there is a sizable opportunity for insurers to pursue,” the study said.

These firms have become more attractive to insurers because opportunities are limited among national accounts and competing for small commercial business often means competing primarily on price, Conning said.

Jay Sarzen, Conning director of insurance research, told InsuranceNewsNet that the middle market is an opportunity that might have been overlooked in the past, but no more.

“It represents a big opportunity that I think a lot of insurers have taken for granted over the years, and now that they're seeing the opportunity there, they're starting to focus on it more and more.”

The middle market “is a unique space,” Sarzen said.

“Their risk exposure is far greater than what you see in smaller business but they're not yet big enough for them to understand the true nature of their risk exposure. So unlike large commercial firms that have dedicated risk management departments, middle-market firms don't really have that. That is primarily what they need from their insurers. The insurers really need to be able to highlight what the true nature of the risk is to any middle market firm.”

With the wide variety of midsized firms and their varied complexity, insurers must offer highly customized coverage options in order to remain competitive in this market, Conning said.

Agents and brokers have an important role

Agents and brokers have a role to play in serving middle-market firms, the report said. it is imperative that agents and brokers possess a high level of business expertise and can ask appropriate questions that get to the heart of the risk.

“It’s critical for insurers to have a deep relationship with their agents or brokers, because in many instances, those agents and brokers will be the boots on the ground that will be performing the true risk assessment and reporting back to the insurer on the true nature of that risk,” Sarzen said.

Insurers must explore ways to serve middle-market firms

Insurers may have shied away from serving the middle market in the past, Sarzen said, but they shouldn’t overlook the opportunity in that segment.

“Most of those middle-market firms are on the smaller end but there are plenty of upper-middle-market firms that will be able to generate a significant amount of premium for any insurer,” he said. “It behooves insurers to explore how they can penetrate that market more deeply. There’s a lot of opportunity there.”

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected].