This month we continue our look at the contracting business with the artisan contracting niche. There are some 377,290 artisan contractors in the United States, accounting for nearly $7.2 billion in premiums, or almost 5.5% of total commercial lines premiums written, according to data compiled by IMR (Insurance Market Research) Corp. of Morris Plains, New Jersey. These contractors employ 2.7 million people.
Workers compensation is the largest single line, accounting for 32.4% of total commercial premiums written in this niche market. Fidelity and surety coverages are next, with 30.3%. General liability accounts for 29.6%; commercial property, 4.1%; commercial auto, 3.4%; and boiler and machinery, 0.2%.
The loss ratio for artisan contractors rests at an attractive average of 49.4%, making this an appealing niche market for insurers and agents.
"This is a very important niche market for independent agents, with nearly all of the artisan contractors in the United States being small-sized business, prime targets for agents," according to Ralph Gray, president of IMR. "Just under 350,000 artisan contractors are small businesses, employing fewer than 25 people, and they account for nearly $3.8 billion of the total premiums from this niche. This amounts to an average premium per account of nearly $11,000, adding to the attractive nature of this niche."
The 26,000 medium-sized firms, those employing 25-99 people, account for $2.5 billion in premium. The 2,100 large firms (100-499 employees) account for $804 million in premium, and the 70 jumbo accounts provide $115 million in premium.
"Another factor making this a sought-after area is the fact that each of the 17 subcategories in this niche shows both positive average five-year real and premium growth rates," Gray adds.
Artisan contractors provide $1.62 billion in premium in the Rough Notes Northeast region. The loss ratio is 60.3%. Four of the subcategories in this niche provide more than $100 million in premium in this region. Plumbing, heating and air conditioning contractors represent the largest group, providing $410 million in premium and a loss ratio of 49.6%. The other three are: contractors engaged in electrical work ($250 million, 57.9%), contractors in roofing, siding and sheet metal work ($132 million, 70.5%), and excavation work ($110 million, 64.3%).
There are 77,700 artisan contractors in the region, employing more than 472,000 people. There are approximately 73,240 small (1-24 employees) artisan contractors in the Northeast, providing $899 million in premium for an average of $12,280 per account. The 4,110 medium-sized firms (25-99 employees) account for $518 million for an average of $126,000; the 335 large accounts (100-499 employees) provide $171 million in premium for an average of $510,300; and the 15 jumbo artisan contractors (500+ employees) provide $30.3 million in premium for an average of just over $2 million per account.
Information on this niche market is available from IMR at 39 E. Hanover Ave., Morris Plains, NJ 07950, or call (201) 898-4706.
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ARTISAN CONTRACTORS
Direct Written Premium $ (in millions) Loss Ratio