This month, we're taking a different look at the commercial insurance marketplace. Rather than focusing on a specific niche market, this column will look at the total commercial insurance market of more than $129.4 billion in the United States, coming from some 6,695,310 businesses, according to data compiled by Insurance Market Research (IMR) Corp., one of the PLP Companies.
The most important sector of the economy now is the services sector, which accounts for $28.71 billion in premium from 2,299,407 accounts. Transportation and public utilities represent the second largest sector, with $21.24 billion from 271,657 firms. Manufacturing is next, with $17.23 billion and 377,257 accounts, followed by agriculture, forestry and fishing ($15.80 billion; 387,261 accounts); retail trade ($13.75 billion; 1,521,854 accounts); construction ($12.39 billion; 608,816 accounts); wholesale trade ($9.47 billion; 500,215 accounts); finance, insurance and real estate ($5.07 billion; 610,428 accounts); government ($3.31 billion; 91,192 accounts); and mining ($2.47 billion; 27,223 accounts).
Northeast differences
The service sector is the largest sector in the Rough Notes Northeast region, where it generates $8.67 billion in premium from 477,909 accounts. The service sector premiums represent 26.9% of the total commercial premiums of $32.26 billion written in the region. Transportation, and public utilities is second, providing $6.17 billion from 51,790 accounts. Manufacturing is next, with $4.53 billion and 80,282 accounts, followed by retail trade ($3.64 billion; 315,356 accounts); wholesale trade ($2.64 billion; 104,061 accounts); construction ($2.62 billion; 118,588 accounts); finance, insurance and real estate ($1.68 billion; 126,285 accounts); agriculture, forestry and fishing ($1.19 billion; 41,972 accounts); government ($992.4 million; 14,038 accounts); and mining ($148.3 million; 1,942 accounts).
The most important niche market in this region is anthracite mining, which provides $6.0 million in premium. IMR determines those markets which are most important by comparing the percentage of premiums written in that niche in the region to the percentage written throughout the United States. For example, anthracite mining represents only .018% of commercial premiums written in the Northeast. However, this premium amount represents nearly the total amount written throughout the United States, where it represents only .0044% of total commercial premiums. Thus, this niche market is about four times more important in this region than in the United States overall.
Cigar manufacturing is the second most important in this region, with $0.3 million in premium, followed by hard surface floor covering manufacturers ($4.0 million); freight transportation on the Great Lakes ($25.3 million); bus terminal and service facilities ($0.1 million); malleable iron foundries ($1.2 million); manufacturers of fur goods ($5.1 million); foreign banks & branches ($14.8 million); makers of house slippers ($1.1 million); and manufacturers of semivitreous table and kitchenware ($0.5 million).
Each region has distinctive traits
"This overview of the United States market, combined with the regional breakdown, gives you a real perspective on just how diverse this country is," Lindsay Smith, IMR president, points out. "The important markets include anthracite mining in the Northeast; deep sea transportation in the Southeast; iron ore mining in the Midwest; rice milling in the Southwest; and nuts and grapes in the West, to name just a few. It makes it clear that a cookie-cutter approach to entering these markets certainly is not the most efficacious approach. Companies and agents can save a great deal of time and money researching a region and its best niche markets before deciding what lines to offer or even whether to go into that area."
Smith notes that the information can be brought down to state and county levels to allow companies to zero in on areas where the niche markets match their strategic goals. "For example, our analyses of attractive markets show the wide range that exists, with the hog market being exceptional in Missouri, grapes in California, business credit institutions in New Hampshire, grocery stores in Michigan, and so on."
Information on niche markets discussed in this article, as well as information on any of more than 900 niche markets as defined by SIC (Standard Industrial Classification) Codes can be obtained by writing IMR at 39 E. Hanover Avenue, Morris Plains, N.J. 07950 or by calling Deb Kreger at (973) 898-4706. *
©COPYRIGHT: The Rough Notes Magazine, 1998