What Lines Program Insurers Like, Dislike

Insurers’ appetite for targeted insurance programs still favors larger deals and shuns workers’ compensation risks, according to one expert’s analysis of conditions.

Benfield Inc. Senior Vice President C. Douglas Bennett offered advice on the program insurance market from the perspective of a reinsurance expert who helps brokers assemble programs at the 2005 Target Markets Mid-Year meeting in Baltimore.

Bennett maintained that the program market has stabilized, so that it is now “better for getting carriers’ attention” than it was not long ago when major players were exiting the field.

However the market remains dominated by large, national carriers that are mostly interested in $10 million to $20 million programs. There is some new capacity, mostly for excess and surplus business, but still not much for smaller programs, according to Bennett.

“This is not a reinsurance-driven market,” he further explained, noting that relatively few carriers are buying program-specific reinsurance.

In terms of lines, carriers appear interested in inland marine, miscellaneous professional liability, as well as excess and surplus property and general liability.

On the flip side, carriers do not appear interested in workers’ compensation, long haul trucking, directors and officers liability, non-specialized auto liability, small business owners or umbrella business, according to Bennett.

Bennett suggested that the market needs more capacity for “quality, experienced, start-up” managing general agencies and it could use more management teams that are strong in underwriting. He would like to see better capabilities by carriers for handling highly specialized programs, including better data and benchmarks. Also on Bennett’s wish list: new entrants with appetites for workers’ compensation, commercial auto and umbrella business and more alternatives for smaller programs.

What are reinsurers looking for in programs business? Well-focused, specialized programs where carriers perform active due diligence and where there is some risk bearing for both the program administrator and the carrier. Most important, he added, reinsurers look for rates that are actuarially justified.