The property-casualty market contains a “sizeable share” of small insurers, with some having strong positions in specific niche markets, according to a new study.

Stephan Christiansen

After losing a portion of the market in 2002, when larger insurers were able to more quickly tap into additional capital in the hard market, small insurers have recovered, focusing often on niche markets, according to Stephan Christiansen, director of research at Conning Research & Consulting, which prepared the study.

“Yet as the cycle wore on, capital moved toward insurer formations in perceived underserved markets such as medical professional insurance and Florida homeowners,” Christiansen said in a statement. “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.”

Clint Harris, an analyst at Conning, said, “although some may tend to focus on consolidation news and efficiencies of scale,” small insurers remain a force in the property-casualty market.

“As they form and expand to serve unmet needs, small insurers have earned strong positions in some specific markets,” Harris said. “Small insurers can pose a significant competitive threat to large insurers because of their ability to build entrenched insurer-client relationships in certain market segments and their ability to develop rapidly in markets with constrained capacity.”