The U.S. business owners policy (BOP) market consists of nearly 21 million enterprises and produces more than $20 billion in premiums. Within this broad market sector, 44 percent of the premium opportunity is concentrated in 10 classes which are predominately in real estate, repair and maintenance, and accommodation and food services.
The information in this report is derived from the MarketStance estimates of the BOP market, which covers eight general account categories including office, habitational, retail, wholesale, restaurants, service, specialty contractors and motels. The exposure limit for MarketStance BOP data was set at $10 million total insured value per account and $10 million in sales. For contracting accounts, the exposure limit is $500,000 in payroll and $10 million in sales, or $10 million in total insured value.
While these classes represent a substantial portion of available BOP premium, they account for only about 18 percent of the BOP eligible accounts. In terms of available accounts, the top classes include: personal services; real estate agents and brokers; professional, scientific and technical services; independent artists; beauty salons; janitorial services; lessors; offices of lawyers; and insurance agencies and brokerages. (See “Classes with Most BOP Eligible Accounts” chart.)
From a territory perspective, a simple look at available BOP premium by state produces a list of the following top 10 markets: California, New York, Florida, Texas, Illinois, Pennsylvania, New Jersey, Massachusetts, Ohio and Michigan. However, by looking at the forecast growth in sales, employment, payroll and number of firms, a different picture emerges. In terms of growth prospects the top 10 states include: Nevada, Utah, Arizona, Idaho, New Mexico, Wyoming, Alaska, Texas, Oregon and Washington.
A more accurate view of which states offer the best environment for BOP production can be achieved by ranking both available premium and relative growth prospects. All else being equal, those states with the highest volume of available BOP premium and the best growth outlook offer the best BOP opportunity. There are only a handful of these states, specifically Florida, Georgia, North Carolina, Texas and Washington.
On the opposite end of the spectrum, those states with poor growth prospects and smaller available premiums (the red states identified in the map below) are the least conducive to strong BOP production.
Factoring both growth and available premium paints a different picture of which states offer the most favorable conditions for growing BOP business as the “go/caution” BOP Market Environment table illustrates.
A strong economic outlook means a general increase in demand both from new firms and via the growth of existing businesses. It can also suggest greater potential for retaining the accounts being written since growing and healthy firms tend not to shop their coverage as much as stressed firms might.
|Top 10 Business Owner Policy Classes (BOP)||BOP Premium ($ millions)|
|Lessors of residential buildings and dwellings||$2,982|
|Lessors of residential buildings and dwellings, owners classified elsewhere||$1,958|
|Offices of real estate agents and brokers||$1,051|
|Condo and coop owners associations||$480|
|All other personal services||$455|
|Hotels (except casino hotels) and motels||$429|
|Residential property managers||$389|
|Classes with Most BOP Eligible Accounts||Number of Enterprises|
|All other personal services||1,102,736|
|Offices of real estate agents and brokers||928,755|
|All other professional, scientific, and technical services||821,486|
|Independent artists, writers, and performers||705,601|
|Other activities related to real estate||513,276|
|Lessors of residential buildings and dwellings||478,392|
|Offices of lawyers||406,153|
|Insurance agencies and brokerages||377,169|
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