New data from Chubb and the National Center for the Middle Market shows that nearly 75% of mid-market companies report an improvement in overall performance compared to last year – shared in the insurer’s biennial Middle Market Indicator (MMI). A record high figure.Thank you for reading this post, don't forget to subscribe!
Chubb reports that this conclusion is supported by top-line growth over the past 12 months, overall employment growth and continued expansion into new domestic markets with new products and services. The figures show confidence has improved compared with a year ago, when inflation rose.
In the MMI, middle-market companies are defined as firms with earnings between $10 million and $1 billion. The middle market represents one-third of private sector GDP and employs approximately 48 million people. One thousand mid-market executives were surveyed in June to compile the latest report.
“The middle-market sector, they’re not that small … they have trouble reacting to some of these macroeconomic shocks,” said Ben Rockwell, division president of Chubb Middle Market. “But they are not big enough to be publicly traded. Their thinking is a little more quarter-to-quarter, versus maybe a little more time-frame.”
Chubb leaders believe this enables consistent performance from mid-market customers. Yet, according to MMI, 60% of middle market firms surveyed in June found it extremely or very difficult to manage inflation risk, and 40% of respondents reported a negative impact from inflation over the past 6 months.
Anil Makhija is dean of the Fisher College of Business at The Ohio State University, where NCMM is located. Given this economic backdrop, mid-market companies may be interested in securing more insurance coverage, he told attendees of a recent Chubb webinar.
“And the reason is of course inflation, it happens that your property prices also increase,” shared Makhija.
When it comes to inflation, it is important to ensure fair value of buildings and property. Rockwell said this “has been a big topic of conversation with clients, agents and brokers,” as 72% of companies surveyed have seen a change in the replacement value of covered properties due to inflation.
“It impacts their coverage,” Rockwell said. “Those values are reviewed once a year. Our suggestion is that when you’re in an environment like this, it makes sense to do it a little more often when dealing with these challenges.
Rockwell also said that climate-related and catastrophic losses remain the main concern of surveyors. He also shared that respondents pointed to technology, particularly artificial intelligence, as an area of opportunity. 52 percent of Chubb’s mid-market clients think AI is important to their organizations.
“When you have a fairly healthy macroenvironment, as we’re seeing with mid-market companies (that) they’re investing in technology,” Rockwell said, later adding that water damage depends on sensors. Said about prevention measures. and other technologies, “We’re seeing more growth in the mid-market than ever before.”
“And I think that’s a testament to the power of the market,” he added. “Customers are able to invest in it.”
Topics Commercial Lines Business Insurance
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