Middle Market Firms Miss Out on Agents as Risk Management Resource: Survey

October 4, 2021 by

Many middle market companies are failing to use a key risk management resource: their insurance agents and brokers.

According to a survey sponsored by insurer Chubb, only 15% of middle market companies rely heavily on an insurance agent or broker to help them understand and manage risk.

The percentage is low despite the fact agents and brokers can help insurance buyers “better understand their exposures, mitigate risks, and secure the insurance coverages for their unique needs so they can focus on continued growth and success,” says the Middle Market Indicator (MMI) report.

The survey also noted that the pandemic has changed the risk landscape for middle market companies, making them more risk averse.

The survey indicated that 79% of middle market companies surveyed in the second quarter revealed that risk management is “extremely” or “very” important to their businesses after more than a year of dealing with pandemic related and other disruptions, said the survey, adding that this view has risen 11% from 68% during Q4 2020.

Nearly double the firms had an enterprise risk management function in the second quarter of this year than in the fourth quarter of 2020.

However, very few companies said they were completely prepared to manage various types of disruption, such as pandemic-related risk, cyber breaches, hazardous weather, prolonged power outages, and physical damage from water or fire, the survey found.

The following challenges were highlighted by respondents as issues they will be extremely/very likely to experience over the next six months:

  • Shortages of raw material and supplies, cited by 53% of the companies surveyed;
  • General disruption of work due to working from home etc., cited by 42%;
  • Delaying planned investments in the business, cited by 41%;
  • Significant corporate restructuring, cited by 38%;
  • Cash problems, 35%; and
  • Layoffs, 33%.

Other survey findings covered the following areas:

  • Economic confidence. Sixty-six percent of respondents said their company performance has improved compared to one year ago, representing an increase of 78% over Q2 2020 and 65% over Q4 2020, indicating that some middle market firms are showing signs of economic recovery in Q2 2021.
  • Supply chains. One-third of middle market companies believe COVID-19 will have a negative impact on their supply chains in the coming year, indicating that some firm remain concerned about potential long-term economic impacts from the pandemic.
  • Returning to offices. One-half of firms were fully back to on-premises work during Q2 2021, while one-third were in a phased return. More than half of companies said they would encourage employees to get vaccinated, while one-quarter planned to mandate vaccinations.
  • Digitization/cyber. Managing technology has become more challenging during the pandemic due to increased digital adoption and cyber threats. More than half of firms were more likely to invest in digital priorities due to the pandemic, particularly to improve efficiency and increase revenue and customer engagement.

“As risks evolve, it’s critical for middle market companies to continually assess how their exposures may be changing in tandem,” said Ben Rockwell, division president, Chubb Middle Market, in a statement accompanying the report.

“The pandemic has presented many challenges and heightened exposures for middle market companies, from grappling with new levels of supply chain disruption to remote work policies.

The MMI surveys 1,000 executives (CEOs, CFOs and other financial decision makers) from middle market companies — those with $10 million to $1 billion in annual revenue — for its semi-annual Middle Market Indicator report. The survey was conducted in June 2021 by Chubb and the National Center for the Middle Market.

The 2Q 2021 survey was conducted by RTi Research on behalf of the National Center for the Middle Market and funded in partnership with sponsor Chubb and supporters Visa and VistaVu.

The National Center for the Middle Market is a collaboration between The Ohio State University Fisher College of Business and Chubb.