Unprecedented Growth in Middle Market Opportunities

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Here are the takeaways from the Chubb's 2023 middle market report:

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Performance and Expectations

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• Middle market companies experienced robust growth in 2023, with an unprecedented level of revenue growth, especially among larger companies ($50 million to $100 million in revenue). However, a slowdown in expansion is expected in 2024.

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• Employment growth remained above pre-pandemic levels but declined throughout 2023, with expectations of further cooling.

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• Economic confidence has been steady but trending lower since mid-2021.

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• A record high in performance improvement was reported, with over three-quarters of companies improving their overall performance over the past year.

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• AI adoption for data management and efficiency improvements has increased.

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Risks and Challenges

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• Inflation is the top emerging risk, followed by recession and talent retention challenges. Inflation concerns are exacerbated by rising labor costs and Middle East conflicts affecting trade routes.

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• Companies are planning to combat inflation and economic uncertainties by raising product and service prices and further integrating AI.

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• Workforce challenges persist, with significant issues in hiring and retaining skilled talent, impacting workplace- and workforce-related risks.

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• Other significant risks include competitive, supply chain, regulatory/compliance, and cybersecurity risks.

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Insurance and Preparedness

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• Companies are increasingly aware of insurance coverage gaps, especially in the face of inflation and potential operational disruptions.

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• The need for adequate business interruption coverage and realistic business continuity plans is emphasized, along with strategies to mitigate risks like water damage.

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• Cybersecurity emerges as a top concern for insurance decisions, with many companies recognizing the need for better cyber insurance coverage.

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• Brokers and agents should focus on helping companies build risk prevention and mitigation measures into day-to-day operations

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Data Highlights

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• Revenue growth is expected to slow down in 2024, with projections of an 8.1% increase compared to 12.4% in Q4 2023.

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• Employment growth is also expected to decrease, from 9.6% in Q4 2023 to a projected 8.7%.

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• AI adoption has grown, with 34% of companies now testing or using AI for data analysis, improving efficiencies, and customer service.

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• Plans for expansion show a cautious pullback, with decreases in the likelihood of introducing new products/services or expanding into new markets.