Chubb and the National Center for the Middle Market (NCMM) have unveiled new data showing that middle market firms have continued to experience significant growth despite challenges such as inflation, cybersecurity threats, natural disasters, and insurance coverage deficiencies.
These insights form the core of the 2023 Year-End Middle Market Indicator (MMI) report, indicating that middle market companies have seen an average revenue increase of 12.4% compared to the previous year, with 55% of firms achieving growth of 10% or more.
Four in five (83%) companies reported year-over-year revenue increases, marking the highest growth rates recorded since the MMI began its surveys in 2012. Last year, the 2023 report noted inflation, the economic downturn, and residual pandemic impacts as the main challenges for the segment.
The report also sheds light on the preparedness of these companies to tackle emerging risks, with a considerable number of firms feeling ready to handle inflation (45%), catastrophic incidents (53%), and cybersecurity threats (58%).
However, there is also a noticeable shift in expansion plans compared to mid-2023, with fewer companies planning to introduce new products or services, expand into new domestic markets, or add new facilities in the coming year.
Inflation remains the primary concern for these businesses, driven by rising labor costs and geopolitical conflicts affecting trade routes. Nearly 60% of companies find managing inflation to be extremely or very challenging, with many planning to raise prices and increase their use of AI and data analytics to improve efficiencies.
The United States experienced a record number of billion-dollar climate disaster events in 2023, emphasizing the importance of adequate insurance coverage and business continuity planning. Despite the high preparedness level for catastrophic incidents, nearly half of the surveyed firms consider weather-related risks a top factor in their insurance purchasing decisions.
Cybersecurity remains a top concern, with a significant portion of companies acknowledging the need for better cyber insurance coverage.
Mike Kessler, division president at Chubb Global Cyber Risk, stressed the importance of addressing cyber risks proactively to avoid severe disruptions.
“We work with companies and their broker or agent to provide insight into the causes of cyber incidents and cyber security solutions to help prevent attacks, as well as assess protection gaps and tailor coverage to help clients recover from a cyber incident,” Kessler said.
Ben Rockwell, division president at Chubb Middle Market, also highlighted the importance of these findings, noting the significant role middle market companies play in the overall health of the US economy.
“The findings of the MMI provide relevant direction and insights for agents and brokers to best counsel middle market companies in navigating and mitigating the risk management pressures with this critical business segment,” Rockwell said.
The MMI report also highlights gaps in insurance coverage, with companies recognizing the need for additional protection in areas such as multinational operations, environmental liability, and cybersecurity. This acknowledgment points to an opportunity for businesses to reevaluate their insurance coverage to ensure it meets their evolving needs.
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