Get with the Programs

By Andrew G. Simpson | May 23, 2005

If Insurance Journal readers have one consistent request it is for more information about available markets. No matter their agency size, history, politics or niche, readers like knowing about new opportunities for their own businesses, as well as about what the competition is doing.

Program marketing is one of the hottest topics among insurance opportunity seekers today. Just weigh this issue! Or attend a meeting of the fast-growing Target Markets association for program administrators.

There is other evidence as well.

Guy Carpenter & Company Inc., the global risk and reinsurance specialist that is a part of the Marsh & McLennan Companies, recently announced the results of a survey of domestic insurance companies that write a significant amount of program business through program administrators.

Readers should be pleased to know that the survey results suggest that “carriers are actively seeking new business and the market appears ready to expand–provided that current rate levels are maintained and there is sufficient and reliable program information.”

Some of the key findings of the Guy Carpenter report on program marketing include:

An evolving marketplace–The survey indicates the emergence of new markets, new program administrators and new products, increased merger and acquisition activity, a rising number and variety of third party service providers and the growing use of alternative risk mechanisms.

A sizeable market segment–Nearly three-quarters (72 percent) of respondents estimate the specialty program marketplace to be $20 billion to $40 billion of annual gross written premium. Respondents comprised nearly half of that, reporting aggregate premium writings in excess of $10 billion at year-end 2004.

Significant growth opportunities–Responding carriers project that they will write a total of 70 to 80 new programs in 2005, and 38 percent of the markets report that they see the market increasing during 2005.

Diverse geographical preferences–The survey indicates that carriers are fairly evenly split in their preferences for national (30 percent), regional (40 percent) or single-state (30 percent) programs, and it appears that respondents’ geographical appetites are more of an underwriting decision than a licensing issue.

This issue of IJ, which includes first volume of our 14th annual Program Directory, will be followed on July 4 by an issue that looks at the Target Markets, the program administrators organization, and at how to go about building successful programs. Then in early December, we will publish our second volume of the Program Directory for 2005.

At Insurance Journal, we concur that the program marketing segment represents an attractive opportunity for agents, brokers and carriers. We hope we can pay a role in turning opportunity into reality for our readers and advertisers.