"I don't think there is any true definition of the middle market," says Dennis Marvin, underwriting executive with Fireman's Fund's marine segment.
Richard Corbett, president of XL Insurance Environmental, says, "The definition seems to be more important to the large brokers."
Still, every insurer interviewed for this report offered up some form of definition. The traditional (and predominate) metric is premium. For some insurers, the market opens up as low as $25,000, for others it reaches as high as $3 million in total premium.
But total premiums might also fail to accurately represent insureds' exposure as do employee totals or fleet size, says Larry Williams, middle-market vice president at State Auto.
Jim West says that Chubb & Son uses several criteria, including sales figures (from $50 million up to $1 billion). More importantly, says the senior vice president, is whether an account has risk management in-house or purchases alternative risk management tools. Middle-market insureds tend to say "no" to each of those.
These policyholders also, generally speaking, stay within the realm of guaranteed-cost policies. But even that definition doesn't fit all.
"While the lower-end and middle of mid-market-size clients select guaranteed-cost products, the larger middle market clients can and are increasingly selecting loss sensitive products--e.g., intermediate and large workers' comp deductibles, dividend plans and group captive arrangements," says Bob Lindemann, president, middle markets, for Zurich North America Commercial.
"Middle-market buying habits and risk-transfer/financing options are becoming more sophisticated as clients examine the options of guaranteed cost, deductibles, dividends, retros and even group captives on a more frequent basis," he adds.
So insurers seem to agree on one thing. Middle-market clients can be as sophisticated as risk management accounts.
"Heck, yeah, they get the risk management, and the enterprise risk management technique and the integration approach, and we treat them like that," says Williams.
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August 1, 2007
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