A fight is raging over small-business insurance dollars, a recent study says, and now one company is expanding its reach into two new states in an effort to gain those clients.

The study, by Conning Research, detailed a current heightened rivalry for small-business dollars, calling it a “battle” generally driven by a soft property/casualty market and a new appreciation for just how profitable the small commercial market can be.

Arbella Protection Insurance Co. – an insurer that mostly writes personal lines like home and auto – is going after small commercial dollars in Connecticut and New Hampshire.

The company’s new emphasis on gaining small-business customers is a new development for Arbella, which already writes commercial lines in Massachusetts and Rhode Island, said Douglas Jones, president and CEO of Arbella Protection Insurance, but the company wanted to grow in an area that would be a “natural fit.”

With a network of agencies, some of which are already selling Arbella’s home and auto sales, that meant starting up small to mid-sized commercial sales in Connecticut and New Hampshire, and Douglas said the company has ready-made channels to move commercial sales through.

Making the most of those types of distribution channels is what’s going to separate the victors from the defeated in the war over small commercial business, according to the Con-ning study.

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Stephan Christiansen, director of research at Conning, said in a release that the crux of the battle is over distribution methods – mostly, trying to make small-business sales more appealing to agents – and building the right type of product for the customer:
“So far, both battles are being won on focus, not scale.”

Lisa Wrolstad, vice president of commercial lines with The Hanover Insurance Group in Worcester, said while her company has lowered premium costs for some prod-ucts, The Hanover has focused most of its energy on reforming those products to attract buyers, as well as making small business sales easier for agents.

For years, agents have been reluctant to emphasize small business because the work was time-consuming and didn’t lead to the same size payout of going after a lar-ger company’s business. To encourage agents to sell more small commercial, The Hanover formed an online system that allows agents to punch in data and get rates more easily, Wrolstad said, and that helps agents spend more time analyzing coverage and working with clients.

The Hanover turned its attention to improving its small commercial segments a couple years ago, she said, and a good thing, too – with more insurers rapidly expand-ing into this market, it’s difficult to pry your way in if you don’t have a foothold already.

“It’s very difficult for companies to all of the sudden wake up and say, ‘Gosh, we should really get more serious about small commercial,'” she said.

Mike Chapman, chief sales officer for insurance broker HUB International New England, said more insurers are also making better use of their data, mapping out where the moneymakers are – and they’re realizing that it’s in small business.

Small businesses are great clients to have, he said: you’re generally dealing directly with the owner instead of a gang of intermediaries, and small businesses rarely make claims.

Others attribute the heightened interest to good old-fashioned reasons like the current soft market for property/casualty insurance, saying that has led recently to much lower premiums.

Bill Budds, owner of Smith Insurance Inc. in East Lyme, Conn., said he commonly sees insurers slash premiums by 20 or 30 percent to go after small businesses.

“I would go so far as to call it hypercompetitive,” he said.

A Smith Insurance client, Jonathan Duncklee of Stonington’s Duncklee Cooling and Heating, said his rates went down 15 percent, and he’d had eight insurers compet-ing for his business.

And with fuel costs rising and a slumping economy, lower insurance costs are a big relief, he said.

“I’m in survival mode.”