Large corporations are facing significant challenges as they deal with a variety of emerging risks. These include global supply chain disruptions and shortages in casualty insurance. According to industry experts, many corporate leaders are feeling the strain, and brokers have an essential role to play in helping them manage these issues.
Jeff Cole, an assistant vice president at Sentry Insurance, highlighted that the reemergence of supply chain problems is currently the top concern for businesses. Unlike the previous disruptions caused by the COVID-19 pandemic, today’s challenges are largely due to geopolitical tensions and tariffs. In a recent survey, 82% of executives reported feeling more stressed this year, with 45% pointing to supply chain issues as a major source of anxiety.
During the pandemic, supply chain disruptions affected both domestic and international operations. Now, however, the focus has shifted to cross-border challenges driven by tariffs. Cole noted that the costs of imported goods have risen, impacting companies that rely on overseas manufacturing. Domestically, businesses are struggling with logistics and labor shortages, leading 90% of surveyed companies to either increase or start using their own drivers.
Labor shortages are further complicating the situation. Many companies in the manufacturing sector expect to either maintain or reduce their operations in the coming year, which is unusual for large businesses. Cole remarked that this reflects a deep sense of uncertainty among corporate leaders.
In addition to supply chain issues, the casualty insurance market is experiencing a capacity crunch. Martin Neuhaus, president of Munich Re North America, explained that a significant shortage of insurance capacity is making it difficult for brokers and their clients to secure necessary coverage. Many companies have seen their insurance limits drop dramatically, with some facing reductions from $25 million to as low as $3-5 million.
This decline in capacity is largely driven by rising jury awards and increasing claims severity. In 2023, U.S. juries awarded over $14.5 billion in large verdicts, marking a 15-year high. The commercial auto sector continues to be a challenge as well, remaining unprofitable despite several rate hikes.
Beyond these specific issues, broader economic uncertainty is also affecting corporate confidence. Nearly 40% of executives in a recent survey cited macroeconomic unpredictability as a top concern, while 34% mentioned inflation. These pressures are prompting companies to be more cautious with their financial planning. Over half of the executives plan to increase their insurance purchases, but they are looking to share more risk through higher deductibles and alternative risk transfer strategies.
The impact of inflation is particularly noticeable in workers’ compensation claims. Although the frequency of claims has been declining, the severity has been rising due to medical inflation and higher salaries for healthcare professionals. As a result, many companies are increasing their safety budgets to avoid workplace injuries.
In this challenging environment, the role of brokers has become more critical. Brokers are seen as strategic partners who can help companies manage uncertainty and make informed decisions. Neuhaus emphasized the need for flexibility and responsiveness in the insurance market, while Cole noted that brokers should focus on safety protocols and claims management.
As companies face tightening capacity and economic volatility, they are concentrating on what they can control: risk management, employee safety, and strong insurance partnerships. With many major U.S. companies expecting no growth or even contraction, the focus is shifting towards assessment and strategic reallocation.