Survey: Inflation is greatest concern for middle market firms
A survey from Chubb shows increased replacement and material costs have forced many firms to examine how thorough their insurance coverage really is.
Despite a tough hiring landscape, 58% of middle market firms have actually increased their workforce over the last twelve months, compared to 45% who reported the same at mid-year 2021. This comes from the Middle Market Indicator: Mid-Year 2022 survey report, recently released by Chubb, in partnership with the National Center for the Middle Market (NCMM).
One-thousand executives from middle market firms were surveyed for the report in order to identify trends and evolving risks affecting that segment of businesses. Industries examined in the report were financial, manufacturing, life sciences and technology.
In addition to hiring increases, middle market firms surveyed also reported increases in mean revenue growth, climbing from an average of 8% in Q2 2021 to 12.2% in Q2 2022. This jump in revenue comes with a burst of performance improvement, with 73% of executives claiming their firm performance has improved over the last year.
Inflation, they found, remains a major issue for middle market companies, with nearly 40% of companies stating they have experienced a negative impact because of things like higher gas prices, the increased cost of raw materials and growing wages.
When it comes to insurance, inflation leaves a big mark as it drives up replacement costs, and the surveyed executives said this has affected their ability to replace covered assets with their existing insurance policies. As a result, around three-quarters say they will consider raising prices to compensate for inflation. Around one-quarter of middle market firms said they have evaluated their insurance coverages to ensure they cover these bloated costs.
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“Middle market companies are experiencing sustained recovery, posting record revenue increases and hiring more workers to meet unprecedented consumer demand,” said Ben Rockwell, division president, Chubb Middle Market, in a release. “As economic factors impact the cost of risk, the collaboration between middle market firms and their insurance agents and brokers is more important than ever in developing robust risk mitigation strategies and identifying potential coverage gaps to help minimize exposures which could inhibit future growth.”
Other concerns cited by the middle market firms surveyed include supply chain risk (40%), catastrophic risk (40%), competitive risk (44%), pandemic risk (51%) and insufficient cyber security (41%).