New data released from Chubb and the National Center for the Middle Market (NCMM), housed at The Ohio State University Max M. Fisher College of Business, reveals that middle market firms are continuing to report sustained growth despite ongoing macroeconomic pressures.
According to Chubb and NCMM's 2022 Mid-Year Middle Market Indicator, despite the 11 percentage-point drop in global economic confidence compared to six months ago (64% in the second quarter of 2022 vs. 75% in the fourth quarter of 2021), nearly four out of five (79%) middle market firms are reporting revenue growth from a year ago, and more than half (58%) continuing to add to their workforce – even in a tight labor market.
"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. "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."
According to mid-year survey results, inflation has emerged as a major concern for middle market companies. Of the 39% of firms reporting that inflation has negatively impacted their company, 62% say they have raised their prices or rates in response. Additionally, middle market firms are keenly aware of how the cost of risk has increased, with three out of four (75%) firms recognizing that the replacement cost of covered assets has increased – highlighting the importance of accurate valuations and strong business continuity plans.
Supply chain challenges continue to be a significant hurdle, with 55% of middle market companies reporting that they have been directly impacted by supply chain disruptions, up from 47% in the fourth quarter of 2021. Of the middle market firms that have been impacted by supply chain delays, 86% report a negative impact on current revenue, and 85% report a negative impact on revenue projections for the remainder of 2022.
Nine in ten (90%) middle market leaders are working closely with their insurance agents and brokers to identify best practices for reducing exposure to a range of risks amidst uncertain economic conditions. As business needs and exposures evolve, middle market companies should regularly review their strategies and coverages and make necessary adjustments, with special attention to insurance programs, where they should ensure appropriate coverages and limits are in place.
Chubb's Executive Summary with detailed survey findings can be found here. Industry-specific insights among middle market technology, manufacturing, financial services, and life sciences companies, are forthcoming.