The US small commercial insurance market reached an estimated $158 billion in direct premium by the end of 2025. New research suggested, however, that carriers pushing deeper into the space are finding it far less uniform than that figure implies.
A study from Conning argued that the segment covers a wide spread of businesses. At one end are sole proprietors and micro firms. At the other are accounts edging into the middle market, each with different economics, underwriting demands and distribution needs.
The firm concluded that insurers widening their appetite will need to match underwriting, product, service, distribution and technology much more closely to the segments they choose to target.
"Insurers need to determine which segments align with their capabilities, make it easier for agents to place the right risks, and use technology in ways that improve speed and consistency while preserving necessary judgment," said Jay Sarzen, a director in Conning Insurance Research and author of the study.
Conning estimates that approximately 29 million small businesses represent a more actively addressable market for carriers and their distribution partners. That is below the 34.8 million small businesses counted by the SBA Office of Advocacy in its 2024 state profiles.
The SBA figure uses a broad definition covering firms with fewer than 500 employees. The release does not set out how Conning arrived at its own estimate.
Executive interviews carried out for the study point to micro businesses as a growth segment in their own right. According to the research, these accounts offer premium today and a route to larger accounts as the firms behind them grow.
For carriers, that makes the smallest end of the market a long-term customer acquisition play as well as a volume one. For agents, it raises the question of whether micro clients are worth servicing directly or better left to digital channels until they scale.
Conning found that data, automation and AI can improve efficiency and extend reach. It also found that agents, underwriters and human expertise remain important for more complex risks.
The research lands as small businesses sit on the wrong side of the pricing cycle. Broker survey data reported by Insurance Business showed small business premiums rising roughly 1.1% while large and mid-sized accounts got relief of 2.7% and 1.9% respectively. Minimum-premium floors, catastrophe exposure and hardening casualty lines were the drivers. This follows the end of a 33-quarter run of commercial insurance premium increases in the first quarter of 2026, according to the Council of Insurance Agents and Brokers.
Service quality is also under scrutiny. JD Power's 2026 US Small Commercial Insurance Study found overall satisfaction rose 15 points to 713 on a 1,000-point scale. It also found a 203-point satisfaction gap between clients whose broker understands their industry and those whose broker does not. Independent agents placed 62% of all US P&C premiums written in 2025, according to the Big "I" 2026 Market Share Report.
Taken together, the findings suggest carrier appetite in small commercial will become more segmented and less predictable. If insurers draw sharper lines around the segments they want, agents may find that a carrier keen on one class of micro account is pulling back on another.
Similarly, a market that welcomes a growing contractor this year may hand it back at the next renewal once it drifts toward middle-market complexity.
The agencies best placed to benefit are likely to be those that can present carriers with clean, accurately classified small accounts and demonstrate the industry knowledge that clients reward.
As automation takes over the simplest business, the value of the agent shifts toward the harder placements that technology cannot yet price with confidence.
