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 $1.23 billion in premium in the Rough Notes Midwest region. The loss ratio is 45.7%. Plumbing, heating and air conditioning contractors represent the largest subgroup in this niche, providing $314 million in premium and a loss ratio of 36.6%. Contractors engaged in electrical work represent the next largest group, providing $167 million in premium and a loss ratio of 42.7%. Other important subcategories include contractors engaged in roofing, siding and sheet metal work ($116 million, 55.1%), contractors engaged in concrete work ($95.5 million, 43.5%), and contractors involved in excavation work ($71.8 million, 51.8%).
There are 70,400 artisan contractors in the region, employing more than 501,000 people. There are approximately 65,350 small (1-24 employees) artisan contractors in the Midwest, providing $659 million in premium for an average of $10,090 per account. The 4,620 medium-sized firms (25-99 employees) account for $412 million for an average of $89,200; the 388 large accounts (100-499 employees) provide $137 million in premium for an average of $353,250; and the 10 jumbo artisan contractors (500+ employees) provide $18.9 million in premium for an average of $1.89 million per account.
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ARTISAN CONTRACTORS
Direct Written Premium $ (in millions) Loss Ratio
