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New survey reveals top insurance challenges for middle market businesses

Survey also shows what midsize businesses look for in an insurance agent

October 2020 | General Industries

BY ZERONA SHARPE

KEY HIGHLIGHTS

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80% of middle-market companies indicated that they are concerned about the future of their business

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77% of middle-market business owners indicated that they have or will be reassessing their insurance needs due to economic uncertainty

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68% of middle-market businesses struggle to determine the appropriate levels of coverage for their company’s needs

male construction worker wearing facemask

These days, running a successful business of any size is no small accomplishment. It takes time, effort and dedication. Each year, businesses have new and ongoing challenges to tackle. Whether it’s preparing for the latest cyberthreat, addressing labor trends, dealing with industry disruption, sizing up changes in consumer behavior or complying with new regulatory requirements, businesses have a lot to consider.


Of course, the events of 2020 have drastically changed the landscape for most businesses. The fallout from the COVID-19 pandemic and corresponding economic uncertainty have uprooted life as we know it. Against this backdrop, it’s no surprise that middle-market businesses are increasingly turning to their insurance agents for assistance. The best-equipped insurance agents are those prepared to deliver tailored guidance and value-added services that help their clients effectively manage their business through these uncertain times.


This sentiment was underscored in Nationwide’s latest Agent Authority research, which involved surveying over 600 middle-market businesses and 400 independent insurance agents from across the country. In this article, we will examine key findings from that research and how independent agents can leverage this information to meet the needs of clients and prospects.


COVID-19 and economic uncertainty weigh heavily


There is no denying that the ongoing COVID-19 pandemic and the state of the economy weigh heavily on businesses across the country. This is especially true for middle-market companies.


The owners of these businesses have the highest level of concern when it comes to how their company will fare during an economic downturn. In fact, 80% of middle-market companies indicated that they are concerned about the future of their business in the current economic environment. When it comes to their outlook for the next 12 months, businesses are more divided. Nearly half of middle-market business owners believe that the economy will improve by this time next year.


More than 93% of middle-market businesses have taken proactive measures to protect their assets.

So how have businesses reacted to a changing economy? According to our research, more than 93% of middle-market businesses have taken proactive measures to protect their assets. And 77% of middle-market business owners surveyed indicated that they have reassessed or will be reassessing their insurance needs due to economic uncertainty.


This sentiment is even more profound for middle-market businesses with fleets. Over 90% of these businesses feel the need to reassess their insurance in the current environment. At the same time, more than 75% of these same businesses are unsure of how the economy will impact their insurance coverage needs moving forward. This speaks to a potential opportunity for insurance agents to help their clients through these difficult times by providing sound insurance guidance that meets the realities of the current environment. For many agents, the ability to provide this level of service will require staying up to date on the latest trends in the insurance industry and developments in the industries they sell to.

Ongoing insurance challenges in the middle market


As middle-market businesses are re-examining their insurance needs, they are coming up against several challenges. When businesses grow and enter the middle market, they tend to face a wider range of exposures and insurance challenges than their smaller counterparts. Addressing these challenges can take a great deal of time and effort, as well as input from various stakeholders in the business.


A majority (71%) of middle-market businesses reported that understanding what is and what is not covered under their insurance policies is a challenge. Almost the same amount (69%) of middle-market businesses — along with 67% of middle-market businesses with fleets — indicated that it can be difficult to understand the different types of coverage available to them. Finally, determining appropriate levels of coverage and policy limits is a constant struggle in the middle market. In fact, 68% of middle-market businesses struggle to determine the appropriate levels of coverage for their company’s needs.


Top 5 insurance challenges for middle-market businesses
General middle-market accounts Middle-market accounts with fleets (20+ vehicles)
Understanding what is and what is not covered in my policy The length of time it takes to settle claims
Finding the best price for my protection needs Finding the best price for my protection needs
The length of time it takes to settle claims Understanding what is and what is not covered in my policy
Understanding different types of coverage Understanding insurance terminology
Keeping up with the new technology offered by the insurance industry Keeping up with the new technology offered by the insurance industry

Source: Nationwide Agent Authority research


These findings demonstrate that middle-market companies are looking for more engagement from their insurance partners. Many businesses are seeking tailored advice from their agents that enables them to understand their risk profile and make informed insurance decisions. However, for many agents, this remains a challenge. According to our research, more than half of the agents we surveyed feel they can improve when it comes to:


  • Educating clients on the level of coverage they need
  • Understanding the nuances between different industries
  • Educating clients about different types of coverage
  • Educating clients on insurance terminology

Practically speaking, those agencies that are positioned to deliver to their clients technical policy guidance in a timely manner will fare better than their counterparts by meeting the needs of their clients.




Taking a more holistic approach


For many dynamic, growth-minded organizations in the middle market, a holistic approach to risk management is key to their success. Nationwide’s Agent Authority research shows that there is a strong appetite in the middle market for guidance that extends beyond traditional insurance topics. In particular, the middle-market businesses surveyed indicated that they would welcome more information on a whole host of topics, including cybersecurity, employee benefits, safety, loss control, emerging risks, business interruption and disaster planning.


These findings speak to an opportunity for insurance agents to differentiate themselves from their competitors. Agents who are prepared to help businesses solve pressing challenges, limit exposures, become more informed and take advantage of opportunities may be able to build stronger ties with their clients.


Core qualities that middle-market businesses look for in their independent insurance agents


While businesses are always looking for cost-effective insurance solutions, the ability to provide competitive pricing isn’t the only factor that businesses use when selecting an agent. In fact, the top five characteristics that middle-market businesses use when selecting an agent focus more on quality of service, value-added offerings and industry know-how.


What middle-market businesses look for in an insurance agent
General middle-market accounts Middle-market accounts with fleets (20+ vehicles)
Trustworthiness Trustworthiness
A strong reputation Knows and understands my needs as an insured
Superior customer service The ability to help grow my business
Knows and understands my needs as an insured Offers cost-effective insurance solutions
Offers cost-effective insurance solutions Industry expertise

Source: Nationwide Agent Authority research


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KEY TAKEAWAYS

Nationwide’s Agent Authority study surveyed over 600 middle-market businesses and 400 independent insurance agents from across the country

As middle-market businesses are re-examining their insurance needs, they are coming up against several challenges, from understanding different types of coverage to keeping up with new technology offered by the insurance industry

The best-equipped insurance agents are those prepared to deliver tailored guidance and value-added services that help their clients effectively manage their business through these uncertain times

TAKE THE NEXT STEP


Learn more about Nationwide’s Agent Authority survey and how you can strengthen relationships with mid-market business owners here. If you're an agent interested in growing your commercial book of business, please go to nationwide.com/agents.



about the expert

Zerona Sharpe, Director of Middle Market Business Development

Zerona Sharpe headshot

Zerona leads a team of Middle Market Business Development and Underwriting experts within the General Industries practice. She joined the Nationwide organization... in 2016 as an Underwriting Specialist before moving into a leadership role as Construction Underwriting Manager in 2018. In her current role as Director, Zerona is responsible for driving growth, profitability, retention and overall satisfaction with key distribution partners.

With over 20 years in the commercial Property & Casualty space, her background includes underwriting for Zurich, Chubb, Allied World and Philadelphia Insurance Companies. Her underwriting expertise spans 50 states for all lines of business.

Zerona holds a Bachelor of Business Administration degree from Eastern University in Pennsylvania, along with the Chartered Property Casualty Underwriter (CPCU) and Associate in Underwriting (AU) designations. She is an active member within the CPCU society at a local and national level; she was recently appointed as the Chair of the Emerging Leaders Committee.
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Survey methodology


Nationwide commissioned Edelman Intelligence to conduct a 20-minute quantitative online survey among a sample of 2,600 U.S. independent insurance agents, small-business owners, mid-market business owners, mid-market business owners with fleet vehicles, African American business owners, Hispanic business owners and general consumers between June 9 and June 25, 2020. The goal was to understand what business owners and consumers value when buying or renewing insurance policies, explore the various challenges each audience faces concerning insurance, gauge perceptions of the economy and how each audience is managing uncertainty, and discover the actions that business owners and consumers have taken as a result of COVID-19 and the conversations they’re having with agents. As a member in good standing of the Council of American Survey Research Organizations, Edelman Intelligence conducts all research in accordance with the Code of Marketing Research Standards.


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