Retail stores offer more than $2 billion in premium

Retail stores offer more than $2 billion in premium

The retail store market epitomizes Main Street America, an important part of most independent agents’ portfolio. These businesses provide more than 2 billion in premium or around 1.6% of the total commercial insurance premiums written in the United States. The average lass ratio for these markets is 72.5%, indicating a need for careful selection. For the specialty stores in this group, package policies normally are available, simplifying marketing and policy comparisons.

Department stores represent just under half of this market with $968 million in premium and a 79.6% loss ratio, reflecting the willingness of insurance companies to compete for these generally larger businesses. Miscellaneous general merchandise stores provide $250 million in premium and a 67.8% loss ratio. Specialty stores, while offering generally smaller premiums, also offer more attractive loss ratios. The largest specialty store market, jewelry stores, provides some $214 million in premium and a 59.8% loss ratio. It is followed by sporting goods and bicycle shops, which provide $143 million in premium and a 70.7% loss ratio. There are two other subgroups that offer in excess of $100 million in premium — gift, novelty and souvenir ($118 million, 63.2%) and hobby, toy and game shops ($101 million, 71.9%).

Although large and jumbo stores are an extremely important part of this niche, small and medium-sized accounts still account for more than half the premium and the vast majority of establishments, according to data compiled by IMR (Insurance Market Research) Corp. of Marris Plains, New Jersey. Approximately $1.1 billion in premium, or 54% of the total, is in small and medium-sized accounts. Of the 164,000 establishments, 156,000 are small or medium in size. This makes this market ideal for independent agents who tend to dominate this segment of the commercial lines market,” according to Katherine Grieder, IMR vice president.

IMR data shows that there are more than 143,000 small (1-24 employees) retail stores in the United States, providing $646 million in premium for an average of about $4,500 per account. The nearly 13,000 medium-sized (25-99 employees) establishments provide nearly $452 million in premium for an average of more than $35,000 per account. There are nearly 8,000 large (100-499 employees) retail stores in the United States, providing $859 million in premium for an average of nearly $108,000 per account. The 212 jumbo (over 500 employees) accounts provide $73.2 million in premium for an average of $345,000 per account. Retail stores employ some 2.9 million people throughout the United States.

Retail stores provide nearly $406.8 million in premium in the Rough Notes Southeast region. The loss ratio is 76.5%. Department stores represent the largest subgroup, with $181 million in premium and a loss ratio of 87.7%. Miscellaneous general merchandise stores are next, with $56.6 million in premium and a 71.8% loss ratio. Jewelry stores represent the largest specialty store group, providing $52.1 million in premium and a 59.5% loss ratio. Sporting goods and bicycle shops are next, with $25.7 million in premium and a 73.6% loss ratio.

These businesses employ some 686,000 people in the Southeast. There are nearly 40,800 retail stores in the Southeast — 35,600 are small-sized firms providing $144 million in premium for an average of more than $4,055 per account; 3,150 medium-sized establishments provide $95.8 million for an average of nearly $30,400; the 2,000 large firms provide $160 million in premium for an average of $80,150 and the 27 jumbo accounts provide $6.2 million for an average of $230,800.

Information on this niche market is available from IMR at 39 E. Hanover Ave., Morris Plains, NJ 07950, or call (201) 898- 4706.

Copyright Rough Notes Co., Inc. Dec 1995

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