Insurance for Next-Gen Entrepreneurs – Competitive Landscape
There are five major players in the insurance market that are currently serving next-gen entrepreneurs in the United States: Nationwide, State Farm, The Hartford, Liberty Mutual, and Travelers. These insurance providers were distinguished as the "top" companies serving next-gen entrepreneurs based on their status on the McKinsey Report's published information on small commercial insurance providers.
The McKinsey Report defined businesses in the small commercial market as having up to 100 employees and $100,000 in annual premiums. This market is divided among many carriers, the largest of which only accounts for six percent of premiums. Some of these insurance providers appear to cater more to the needs of next-gen entrepreneurs than others, despite their similar market shares. Details on the competitive landscape that these companies form can be found below.
Nationwide is the largest insurer of next-gen entrepreneurs, accounting for six percent of the small commercial market. However, despite its popularity with next-gen entrepreneurs, Nationwide does not target this market specifically. When next-gen entrepreneur customers visit the Nationwide Insurance website, there are no options on the drop-down menu that are specific to them. However, they may find what they are looking for by choosing options like "Retail" or "Professional Services."
Nationwide policies that might suit next-gen entrepreneurs could include Business Liability Insurance, Commercial Property Insurance, or Cyber Liability Insurance. However, overall, the insurance options offered by Nationwide seem more geared toward traditional models of business, with no focus on technology-heavy or technology-savvy companies.
Nationwide is the 7th largest commercial lines insurer, with $7.6 billion in direct written premiums. In 2017, Nationwide's total sales were $46.5 billion, with an operating revenue of $27.5 billion and total assets of $236.1 billion.
2. State Farm
State Farm accounts for five percent of the small commercial market, and it offers next-gen entrepreneurs the ability to view solutions for their business based on where they are in the business cycle. These individuals can choose from options like "Starting Up" or "Growing" to see information based on the status of their business. There's also a link to an article about how to "Insure Your Home-Based Business." State Farm is a user-friendly option for start up entrepreneurs who are just beginning their businesses.
State Farm's total assets in 2017 amounted to more than $160.7 billion and premium earned was $42.42 billion.
3. The Hartford
Insurance provider The Hartford, which also accounts for five percent of the small commercial market, has a specific page that is aimed just at the services that it provides for startups, including sections such as "The Basics of Business Insurance for Startups" and "General Liability Insurance for Startups." The Hartford also targets very specific segments of the business owner market, allowing customers to select from options like New Business, Growing Business, or Mature Business.
Next-gen entrepreneur customers have access to a wide variety of insurance solutions at The Hartford, including Computer, Software, Web, IT Services & IT Staffing, Electronics, Mass Media, Renewable Energy, Advertising, Graphic Design & Media Services. The Hartford's insurance agents are separated by small and midsize businesses, indicating The Hartford's commitment to providing individualized services.
If next-gen customers of The Hartford choose policies in the Technology category, they have access to tailored policies like FailSafe Technology Errors or Omissions Liability Coverage, Data Breach Insurance Coverage, Business Income Extension for Cloud Service Interruption and Business Income Extension for Off-Premises Operations Coverage. In 2017 the Hartford reported that their commercial lines had $7.9 billion in revenue which amounted to 47% of the total revenue.
Although Liberty Mutual also accounts for 5% of the small commercial market, they do not appear to cater specifically to next-gen entrepreneurs. They do not offer specialized coverage for cyber risks, cloud management, or technology error liability, as seen in other carriers.
In 2017, Liberty Mutual report its net income of $205 million and $17 million for the three and twelve months ended December 31, 2017. This was an increase of $62 million and a decrease of $989 million versus the same periods in 2016.
According to the inaugural J.D. Power 2018 Independent Insurance Agent Satisfaction Study, Liberty Mutual has the most satisfied commercial insurance agents. Liberty Mutual is the fourth largest property and casualty insurer in the US based on 2016 data (reported by the National Association of Insurance Commissioners). The company employs more than 50,000 people in over 800 offices throughout the world, offering insurance for personal automobiles, homeowners, commercial automobiles, general liability, property, surety, workers compensation, specialty lines, and reinsurance.
Traveler's accounts for five percent of the small commercial market and offers next-gen entrepreneurs the opportunity to take advantage of their wide range of technology-friendly product lines. Some of these offerings include their CyberFirst coverage and information about emerging risk and technology risk control.
Travelers has experienced recent growth in its sales of cyber insurance, which protects businesses against hacking and other liabilities. Nearly three quarters of the cyber policies that Travelers writes cover up to $1 million in damages, while nearly a quarter cover between $1 million and $5 million.
Travelers is a company of 30,000 employees that had revenues of $28.9 billion in 2017. The commercial businesses of the company had underlying combined ratios of 94.9% in Business Insurance and 83.2% in Bond and Specialty Insurance. Travelers is the second largest writer of commercial US property casualty insurance.
There are five major players in the insurance market for next-gen entrepreneurs, typically identified as the small commercial business segment. Some of these insurance providers appear to market more specifically to next-gen entrepreneurs than others, but all of them have nearly identical market share, with only Nationwide edging slightly ahead of the rest with six percent. State Farm, The Hartford, Liberty Mutual and Travelers each have five percent of the commercial small business market share, according to the well-respected McKinsey Report.