The small Commercial insurance market is viewed as “one of the few bright spots” in the U.S. property & casualty insurance sector, according to a recent report from McKinsey & Co.

The small commercial market, which generally serves businesses with up to 100 employees and $100,000 in annual premiums, has good potential for growth in a “fragmented competitive and geographic landscape.” The report found that direct written premiums were between $99 billion and $103 billion for 2013, up from $91 billion in 2011. This represents just over one-third of the broader commercial lines market and includes about $6 billion in non-standard specialty lines premiums that are fairly evenly distributed across the U.S.

McKinsey found that almost 40% of sole proprietorships in the U.S. don't carry small commercial coverage. Some could be covered under home-based business owner policies or endorsements on their personal-lines policies, which demonstrates the possibility for growth in the smaller business market.

This market is divided among many carriers, with the largest accounting for only 6% of total premiums. However, in the past six years, the market share of carriers with more than $2.5 billion in direct written premiums has increased by 12 percentage points, which suggests that scale is an important driver of growth, according to the report.

In order to remain competitive, carriers will need to improve in a number of areas: the ability to gauge the size and nature of the opportunity, targeting and reaching the right customers, and delivering value propositions that attract and retain them.

Special Reports /

Growth Opportunities with Small Biz

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