Inflation is Top Challenge for Middle-Market Firms, Chubb Study Finds

By Max Dorfman, Research Writer, Triple-I 

Inflation remains the greatest challenge for middle-market companies, according to recent research from Chubb. While the companies Chubb surveyed performed well last year, they are looking at 2024 with trepidation, with rising wages expected to continue fueling inflation. Inflation has also been affected by the Middle East conflicts, which have altered trade routes. 

As a result, nearly three-quarters of companies said they would consider increasing their insurance coverage in response to rising replacement costs of their assets due to inflation.  

“For companies that experienced operational disruptions, nearly a third acknowledged that they could have been covered if they had purchased available insurance,” the report says. “In addition to potentially being underinsured for inflated property and equipment values, companies often underestimate the time it will take to get back up and running after an insured loss, which points to the need for adequate business interruption coverage and more thorough and realistic business continuity plans.” 

Middle-market companies have struggled with inflation since the coronavirus pandemic, partially due to changing employee dynamics. Recession and talent shortage/employee retention were also considered major risks, with 10 percent of those surveyed ranking one of these as the top concern for their companies in the coming year. 

The study notes that:  

More than two-thirds of companies have raised worker pay in the past year, with an average increase of 5.5 percent.   To retain talented employees, nearly half of companies have offered incentive compensation or retention bonuses and plan to continue that in the future.  Fewer than half the respondents felt they have enough cyber insurance coverage. 

Nearly 40 percent of companies surveyed by Chubb expect to raise the prices of their products and services because of these factors.  

Other significant findings include respondents stating that small companies are less prepared for business disruptions than mid-size and large ones. This, the study says, opens an opportunity for risk-management strategies that could reduce the need for increased coverage.  

Learn More:

Triple-I “Trends and Insights” Issues Brief: How Inflation Affects P/C Insurance Premium Rates — And How It Doesn’t

Surge in U.S. Auto Insurer Claim Payouts Due to Economic and Social Inflation

Homeowners Claim Costs Rose Faster Than Inflation for Two Decades

Group Captives Offer Cost-Sensitive Companies Opportunities to Save in Face of Inflation