Middle market companies in the US are starting to direct more laser focus on to their risk management and insurance needs. In today’s interconnected and tech-driven global economy, the risk profiles of middle market companies are more complex than ever before – and this is really starting to grab the attention of executive management and the board.
The past few years has seen a shift in middle market insurance buying trends, according to Marcus Cooper, head of middle markets for North America commercial insurance, Zurich North America. Risk managers are looking to package more insurance products together in order to create holistic risk transfer solutions that cover their company’s entire domestic property and casualty (P&C risks), specialty lines, and international exposures.
“Middle market companies on the whole traditionally wanted to buy their insurance product as a risk transfer mechanism at a guaranteed cost. They weren’t overly interested in receiving a lot of risk management advice,” said Cooper. “In the past three years, there’s been a significant momentum shift with middle market companies looking for much more engagement and advice from their brokers so that they can better understand their risk profiles and what types of insurance solutions best protect their assets.
“While we may not always deal with a full-time risk manager, we’re starting to have much more contact with chief financial officers and chief executive officers who want to better understand how to protect their assets. They want to make sure that as they’re focused on growth, they’re not creating a blind spot and leaving themselves open for potential perils or upset on the back side.”
Zurich NA defines middle market insureds as companies that generate between $10 million and $500 million in annual revenue. The differences between organizations at the bottom and the top of that spectrum are enormous. An insured on the less lucrative end of the scale might be a multi-state widget manufacturer looking for basic risk transfer, whereas the largest middle market accounts might be financial institutions with footprints in multiple countries and risk profiles that demand close attention by brokers and carriers.
As middle market firms grow, many are expanding their operations in new jurisdictions and therefore are becoming exposed to international risks for the first time. Even if they don’t have an international profile, that doesn’t mean middle market companies aren’t exposed to international risks. Cyber risk, for example, is not defined by geographical or jurisdictional borders.
“It’s a bit of a balancing act,” Cooper told Insurance Business. “We’ve got to be able to respect what our customers’ needs are, and our underwriters have to make sure they put the best risk transfer programs in place for the customer, the broker, and for Zurich. We’ve had to adapt to the shift in middle market buying trends. As middle market companies grow more of an appetite to learn about risk, our underwriters are increasingly on the front line of every deal. We’ve been educating and training our underwriting team to equip them with more in-depth knowledge of the industries we do business with.
“We’ve become a lot more local, which means we’re spending more time with our brokers and our customers. As we go forward, we want to send more time in specific industry segments that we think are attractive for our business, in terms of being able to add value and provide the right solutions for our customers, but also from a profitability standpoint for Zurich.”