Small insurers are seizing the chance to address consumers’ unmet needs, giving the market segment a sizable share of the overall property/casualty market and strong positions in some specific market niches, according to a new study by Hartford, Conn.-based Conning Research & Consulting.

“Although some may tend to focus on consolidation news and efficiencies of scale, small insurers as a group continue to maintain a sizeable share of the property/casualty market,” said Clint Harris, analyst at Conning Research & Consulting. “As they form and expand to serve unmet needs, small insurers have earned strong positions in some specific markets. Small insurers can pose a significant competitive threat to large insurers because of their ability to build entrenched insurer-client relationships in certain market segments and their ability to develop rapidly in markets with constrained capacity.”

The Conning Research study, “Property-Casualty Small Insurers: From Static to Strategic,” analyzes the small insurer segment, their strategies for success, and their impact on larger insurer strategies.

“Small insurers lost share in 2002 at the beginning of the past hard market, as large insurers were able to tap additional expansion capital more rapidly,” said Stephan Christiansen, director of research at Conning. “Yet as the cycle wore on, capital moved toward insurer formations in perceived underserved markets, such as medical professional insurance and Florida homeowners. Capital seeks significant returns, and new insurer formations in the right segment will always be a draw for investors and pose an ongoing challenge for larger insurers.”



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