Target Markets Study: Program Business Revenue Doubled in 5 Years

October 28, 2015

The financial performance of commercial property casualty insurance program administrators continues to outpace the performance of the overall property casualty insurance markets, according to the most recent study for the Target Markets Program Administrators Association (TMPAA). Program business premium revenues increased by 7.4 percent reaching $32.3 billion in 2014 up from $30.1 billion in 2013.

TMPAA released the results of its annual research to document the size, characteristics, growth and other base-line information about the program insurance market. “The State of Program Business Study” was presented at the Association’s 15th Annual Summit in Scottsdale, Ariz., this week.

In five years, total program business insurance revenues nearly doubled. The first study reported $17.5 billion in commercial insurance premium revenue in 2010. Today it is $32.3 billion.

Additional findings in the just-released study included:

  • The number of insurance programs increased slightly with approximately 2,100 programs and 1,000 program administrators.
  • While the rate of growth of the program industry has slowed from more than 12 percent in 2013, the industry’s current rate of more than 7 percent from 2013 still substantially exceeds the growth rate of the commercial lines market. The overall commercial insurance industry posted a 1.7 percent increase during the same time period.
  • The study reports that data collection and analysis continue to garner increasing interest among program administrators

Heidi Strommen, president of ProHost USA and current president of TMPAA, said program business has been able to maintain “fast-paced growth despite signs of a softening market.” She added that some of the many challenges facing program administrators include the use of predictive analytics and the establishment of start-up insurance programs.

The annual research study was sponsored by Allied World, BMS Intermediaries, The Chubb Group of Insurance Companies, Ironshore, NetRate Systems and Rockhill Specialty Programs.

The TMPAA defines program business as insurance products targeted to a particular niche market or class, generally representing a book of similar risks placed with one carrier. Program administration includes product marketing, underwriting selection, binding, issuing, and may also include billing, premium collections, data gathering, claims management/loss control and risk sharing. Specialists distribute these programs on a retail, wholesale or direct basis.

The study was conducted by the research firm Advisen. More than 200 program administrators and program carriers responded to the survey. Additional analysis was drawn from the Advisen databases of retail brokers, managing general agents, underwriters and wholesale brokers. Advisen is a member of the TMPAA.

A copy of the executive summary is available on the TMPAA website.

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