Small insurers retain a sizable share of the overall property and casualty market, and many consistently outperform larger competitors, Conning Research & Consulting reported. The Conning study found that small companies have success despite a common notion that large companies have a competitive advantage through economies of scale and diversification opportunities that help them reduce risk.

The Conning Research study, “Property-Casualty Small Insurers: From Static to Strategic,” analyzed the small insurer segment, their strategies for success and their impact on larger insurer strategies. “Small insurers lost share in 2002 at the beginning of the past hard market, as large insurers were able to tap additional expansion capital more rapidly,” said Stephan Christiansen, director of research at Conning. “Yet as the cycle wore on, capital moved toward insurer formations in perceived underserved markets such as medical professional insurance and Florida homeowners. Capital seeks significant returns, and new insurer formations in the right segment will always be a draw for investors and pose an ongoing challenge for larger insurers.”

Conning Finds Small P/C Insurers Retain Decent Market Share (National Underwriter 1/14/10)

January 20, 2010