Chubb and the National Center for the Middle Market (NCMM) surveyed Pacific-based middle market companies[1] in Q4 2020 about their economic outlook, business concerns and attitudes toward risk. One of the main findings—that Pacific-based middle market companies may not be prepared to manage key exposures—presents a significant opportunity for insurance agents and brokers to strengthen their position as essential risk resources.
To that end, here’s what agents and brokers should keep in mind as they help Pacific-based middle market clients better understand and manage potential business threats.
As the data from Chubb and NCMM reveals, the pandemic has been front of mind for Pacific-based middle market companies as they consider risk. More than two-thirds (69%) of Pacific-based middle market companies say managing pandemic risk is extremely or very important, followed by non-cyber catastrophic incidents like natural disasters or operational problems (56%); supply chain risk (52%); legal, regulatory, or compliance risk (51%); competitive risk (50%); and changes in leadership or control such as CEO succession or mergers and acquisitions (46%).
While Pacific-based middle market companies attest to the importance of managing such risks, they are finding themselves unprepared to mitigate them in practice. Take potential property exposures, for example. Even though more than half of Pacific-based middle market companies indicate that managing risk related to non-cyber catastrophic incidents—including natural disasters—is important, the survey also suggested they are not fully prepared to address the property damage such events can cause.
Per Chubb and NCMM data, only 12% of Pacific-based middle market companies feel completely prepared to respond to physical damage from water or fire, and 13% and 14% say the same regarding prolonged power outages and hazardous weather, respectively. Similarly, despite attesting to the importance of managing pandemic risk, only 14% of Pacific-based middle market companies feel completely prepared to respond to a pandemic.
Exacerbating this disconnect between Pacific-based middle market companies’ risk management intentions and risk preparedness is the fact that very few are utilizing insurance agents and brokers to help them. In fact, only 17% say they rely heavily on an insurance agent or broker when it comes to understanding and managing risk. This presents a clear opportunity for agents and brokers. From their risk management expertise to deep understanding of the insurance landscape, agents and brokers are an invaluable resource when it comes to minimizing exposures—and, as the data shows, Pacific-based middle market clients could benefit from their guidance.
As Pacific-based middle market companies begin to evaluate risk in a post-pandemic environment, it’s the perfect time for agents and brokers to showcase their much-needed value.
Data from Chubb and NCMM indicates that Pacific-based middle market companies understand the true value of expertise and insights, and that when it comes to managing risk, they prioritize these factors over price. For example, when reflecting on choosing an insurance carrier, more than a quarter (28%) of Pacific-based middle market companies noted that they were most concerned with finding a provider who offered thought leadership, industry research and market insights. On the flip side, a mere 8% said they were most concerned with whether a carrier had the lowest premium.
While tied to carriers, the lesson—Pacific-based middle market companies highly value expertise—applies to agents and brokers as well.
To this end, agents and brokers should seek out resources that allow them to become specialists in their clients’ areas of focus, such as Chubb Agency Education. Through the professional development webinars on the platform, agents and brokers can deepen their knowledge of the emerging exposures and coverages relevant to their clients—from E&O liability in the life sciences industry to flood insurance and everything in between—and discover best practices for showcasing value in an ever-changing environment.
By seeking opportunities to hone their expertise and showcase it to prospects and clients, agents and brokers can help ensure Pacific-based middle market companies remain appropriately protected, no matter the challenges to come. As the data demonstrates, these companies appreciate the true value agents and brokers bring to the table and could greatly benefit from their partnership.
John Nilson is Regional Executive Officer of Chubb's Pacific South Region.
[1]Pacific-based middle market companies includes middle market companies based in California, Oregon, Washington, Alaska and Hawaii (per the U.S. Census’ definition of the Pacific region). Of note, Chubb and NCMM also surveyed other middle market companies across the U.S.
The opinions and positions expressed are the authors’ own and not those of Chubb. The information and/ or data provided herein is for informational purposes only and is not a substitute for professional advice. Insurance coverage is subject to the language of the policies as issued.