Larger carriers will benefit from a growing focus on digital distribution

Larger insurers are more likely to benefit from a growing focus in the small business insurance market on digital marketing and distribution capabilities, a report by insurance research and investment management firm Conning has revealed.

The firm’s Property-Casualty Strategic Study evaluates the small commercial insurance marketplace, including carrier market share, drivers and projections.

“Our analysis of the market points to an evolution towards digital distribution and marketing, especially for target firms of five or fewer employees,” said Alan Dobbins, director, Insurance Research at Conning.

“Success in the small business insurance market is increasingly being defined by the ability to manage costs, and distribution is at the centre of the expense management discussion.”

Dobbins pointed out that refining the delivery model and ironing out user experience challenges will be the next critical development phase of digital distribution. “This may involve more consolidation among distributors, even as we see a surge in new launches,” he added.

The new study, ‘The Small Business Market: Evolution in Distribution,’ analyses distribution issues and strategic directions for the market through independent research and executive market surveys.

Steve Webersen, Conning’s head of Insurance Research, added: “As the market pursues its digital future, both in support of agents and in direct distribution, larger insurers have been slowly but steadily taking share from small carriers in the market.

“Large insurers now control more than sixty-four percent of the market, but none has more than about six percent of share at this time. Premium growth has been slower than expected, and weaker than the rest of the commercial lines segment. Given the lagging small business premium growth, we expect further share consolidation driven by insurer investment in this market.”