Faced with continuing market softness, the largest commercial insurance agencies are beginning to target small and midsize customers, a study found.

Behemoths like Marsh & McLennan Cos. and Aon Corp., which together control 20% of the $112.9 billion-premium market, are set to challenge smaller agents by marketing to the smaller companies they once shunned, said Nancy Carini, a Conning & Co. vice president who wrote the 102-page study, "Commercial Insurance Brokers: They Snooze, They Lose."

That means smaller agencies will have to look for new partnerships and approaches to compete, she said.

However, Ms. Carini said she believes banks trying to sell insurance to small and midsize customers still have a shot if they take some precautions. Using technology to streamline the business is crucial to serving smaller customers efficiently and affordably, she said.

And since banks are used to tailoring technology for smaller customers, they may already have an advantage, Ms. Carini said.

Steven J. Kinner, the president of James B. Oswald Co. of Cleveland, a large independent insurance agency that markets insurance to the commercial customers of Akron, Ohio-based FirstMerit Corp., said he expects competition from bigger brokers.

"I think the writing is on the wall; they're going to be coming in our direction," Mr. Kinner said.

But Mr. Kinner, who spent 20 years at KeyCorp, said he thinks banks will have an edge as the largest agencies try to prove their commitment and service capability to smaller customers.

"They have to deliver in a marketplace they haven't played in," Mr. Kinner said.

Not everyone buys the idea that the largest brokerages will ultimately pursue smaller accounts.

"We don't see them competing for that," said John R. Curran, president of Morse, Payson & Noyes, the insurance subsidiary of Peoples Heritage Group of Portland, Maine.

"Our expectation is that they will not compete for that business," said Mr. Curran, whose agency sells insurance in four New England states and in New York.

To be sure, banks as a group still have not made a big impact in commercial insurance sales in general, the study found. Of the 294 commercial agencies and brokerages questioned by Conning, only 15% had some relationship with a bank. Of those, only one in 10 was owned by a bank.

And more than half of those surveyed said they had no plans to partner with or work with banks. However, roughly one-third of brokers and agents said they do plan to work with banks, which suggests there is interest, Ms Carini said.

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