Mid-market more confident about risks, but ‘room for growth’– QBE

Mid-market more confident about risks, but ‘room for growth’– QBE

Mid-market more confident about risks, but ‘room for growth’– QBE | Insurance Business America

Report highlights key macro and micro risk concerns

Mid-market more confident about risks, but 'room for growth'– QBE


Gia Snape

Middle-market organizations in the US are slightly more confident about the risks in their business environment but, at the same time, want more risk management advice from their brokers and carriers, according to QBE North America’s 2023 mid-sized company risk report.

Overall, the report found that executives’ concerns decreased by about 11% compared to 2022, returning to 2020-2021 levels.

However, the average percentage of mid-sized companies having a risk mitigation plan for each macro risk fell to 43%, the lowest standing in four years. Financial, digital, and organizational exposures still rank among their highest macro concerns.

The key theme is that anxiety or concern around risks, both macro and micro, has decreased among mid-market executives, but the broader preparedness landscape still offers room for growth, according to Lucas Prahl (pictured), SVP, head of middle market at QBE North America.

“The shift in sentiment indicates changing perceptions of risk within the business environment,” said Prahl. “Business executives are more confident about risks, but [at the same time] they are now really focused on operating their businesses and not quite as focused on the macro and micro risks out the environment.”

Notably, Prahl said the desire among respondents for customized risk management advice and tailored solutions increased to 57% from 49% the year before.

“There are a lot of opportunities for brokers and carriers to help insureds solve for and mitigate risks that are uninsurable and help them think through and be prepared for risks,” he told Insurance Business.

Cyber, financial risks top list of mid-market business concerns

QBE North America’s mid-sized company risk report, now in its fourth year, shows a comprehensive analysis of 12 macro and 99 micro risks, as well as risk mitigation strategies among mid-sized companies with revenues between $200 million to $3 billion.

The survey engaged 384 executives, each responsible for managing and influencing business risk. Respondents held titles of director or higher.

It found that financial risk (related to fraud, operational performance, and liquidity), digital risk (including cyber attacks, corporate espionage, and prolonged system outages), and organizational risks (encompassing talent attraction and retention and demographic shifts) are the top risks for these businesses.

The top 10 most concerning macro business risks in 2023 were:

  1. Financial risk – 58%
  2. Digital risk – 53%
  3. Organizational risk – 50%                    
  4. Business interruption risk – 48%                    
  5. Macroeconomic risk – 43%
  6. Regulatory/legislative risk – 42%
  7. Reputational risk – 41%
  8. Liability risk – 40%
  9. Risk of litigation – 35%
  10. Natural disasters/severe weather – 33%      

Middle market concerns reflect recency bias?

Big movers included macroeconomic risk, which jumped from 36% in 2022 to 43% in 2023, amid concerns over inflation and recession; and reputational risk, which rose from 36% in 2022 to 41%, driven by concerns over customer service, product quality, and employee conduct, QBE North America said.

Natural disasters, notably, were at the bottom of the list, while pandemic-related risks fell out of the top 10.

“It’s not surprising that these business leaders are focused on the things they can control. It is surprising that some risks have slipped and are not quite as top of mind for folks,” Prahl noted.

“I think there’s a recency bias with things like the pandemic, where it’s in the rearview mirror, but I don’t know that it would have fallen completely off my radar as it has to some of our clients.”

Opportunities for brokers in the middle-market space

For Prahl, the near-term view of risk among middle-market business leaders presents an opportunity for brokers to come in and offer a longer-term perspective.

“We see that with these companies, again, it’s a matter of having finite resources and trying to determine where to deploy those resources,” he said.

“We see that in terms of companies feeling like they’re prepared or have a plan in place across these risks, it’s pulled back somewhat sharply, and that’s fascinating to me.

“It’s the opportunity for insurance brokers and carriers to focus on the things that are outside of the day-to-day operations of their business, where we can actually provide risk mitigation and value, not just by providing insurance but also by providing loss control and other preventative upfront measures.”

Do you serve clients in the middle-market? What are their biggest macro and micro risk concerns now? Share them in the comments below.

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