They may not be the bullies down the street, but the insurance industrys largest carriers are usually seen as the biggest challenge to mid-size insurersthats according to Matt Josefowicz, senior analyst for Celent Communications (www.celent.com), a research and advisory firm for the financial services industry.

In his recent report, Technology Market Snapshot: Mid-Size Insurance Companies, Josefowicz explained that mid-size carriers need to make their distribution systems more effective, especially with Web-based tools, if they want to compete. That might seem like making a deal with the Devil; a few years ago, insurers were fearful of the Web and the effect it would have on their relationship with independent agents. But, says Josefowicz, That fear has diminished today.

But how big is a large carrier? Labels like large and mid-size have been muddied by the last decades mergers and acquisitions. Josefowiczs report lists mid-size carriers as those with direct written premium between $100 million and $1 billion. A lot of the larger insurers have scooped up the mid-size carriers, Josefowicz said. Depending on the company and the product line, though, not all these mergers have let either side experience true integration. Integration may be on the to-do list, but a lot of mid-size companies are operating independently of the parent, he said.