Canadian Underwriter

Risk management more important than ever to middle market firms, yet few turn to brokers for advice: Chubb report

October 22, 2021   by Canadian Underwriter Staff

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Risk management has become a top concern for middle market companies surveyed following more than a year of pandemic and other related business disruption, data from Chubb has shown.

According to Chubb’s Middle Market Indicator for Q2 2021, which surveyed 1,000 executives of middle market companies, 79% of those companies consider risk management as “extremely” or “very” important to their firms, compared to 68% in Q4 2020.

Despite the 11% jump in prioritizing risk management, the data indicates middle market companies are “leaving a key risk management resource on the table.”

Only 15% of middle market companies indicated they rely heavily on advice from their broker to help them understand and manage risk – a clear opportunity for brokers to help serve these clients’ unique needs.

“Working with risk management professionals can help middle market firms better understand their evolving exposures and avoid potential insurance coverage gaps,” the report notes.

Pandemic impact

The pandemic has changed the risk landscape for middle market companies, making them more risk averse, the report states.

“As risks evolve, it’s critical for middle market companies to continually assess how their exposures may be changing in tandem,” said Ben Rockwell, division president, Chubb middle market in a release.

The pandemic has presented many challenges and heightened exposures for middle market companies, from grappling with new levels of supply chain disruption to remote work policies, added Rockwell, who has executive operating responsibility for the retail commercial P&C insurance business that serves the middle market in North America through offices in the U.S. and Canada.

“As part of the planning process, middle market companies must make risk management a top priority, assess what they have in place and make adjustments where necessary to address emerging risks.”

The report showed some middle market companies began showing signs of economic recovery in Q2 2021, with 66% indicating their company performance has improved compared to a year ago, representing an increase of 78% over Q2 2020 and 65% over Q4 2020.

While nearly twice as many companies now have an enterprise risk management function than in Q4 last year, very few companies said they were completely prepared to manage various types of disruption, including pandemic-related risk, cyber breaches, hazardous weather, prolonged power outages, and physical damage from water or fire.

Some said they remain concerned about potential long-term economic impacts of the pandemic. A third of middle market companies believe COVID-19 will have a negative impact on their supply chains in the coming year.

The report also shows the risks these companies find most challenging, including:

  • Insufficient cybersecurity: 40% (up from 27% in Q4 2020)
  • Supply chain risks: 40% (up from 27% in Q4 2020)
  • Competitive risk: 39% (up from 30% in Q4 2020)
  • Legal regulatory/compliance risk: 38% (up from 28% in Q4 2020)
  • Catastrophic incidents (national disaster, operational problems): 36% (up from 24% in Q4 2020)
  • Change in leadership or control (CEO succession, M&A): 31% (up from 20% in Q4 2020)

“Brokers are extremely knowledgeable about risk management best practices and can help middle market companies better understand their exposures, mitigate risks, and secure the insurance coverages for their unique needs so they can focus on continued growth and success,” Chubb said in a release.


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