Program Market Growing With $17.5B in Premium, Survey Reveals

Jeremy Hitzig, Target Markets Program Administrators Association (TMPAA) president, presented the results of the first survey ever conducted by the association on program business at the annual conference held in Scottsdale, Ariz.

While Hitzig noted program administration is a highly fragmented business, the survey shows it is growing, with an estimated 1,500 individual programs generating $17.5 billion in premiums. “There’s no official size or scope of the industry,” Hitzig said. “Most are privately owned, oftentimes, partnerships or family-run businesses.”

Program administrators reported 57 distinct insurer relationships and ranked the top five carriers: 1) Lexington Chartis Programs; 2) ACE; 3) QBE Insurance Corp.; 4) AmTrust Underwriters Inc.; and 5) Munich Reinsurance America.

Underwriting profitability is deemed the most important factor of a successful program.

Some 80 percent of respondents reported revenues at $50 million or less, 23 percent between the $2 million to $5 million range.

Distribution of insurance coverage in programs: package business is the largest, next is professional liability at 20 percent, all lines, then casualty and workers’ compensation.

Some 53 percent of the program administrators said their business was increasing compared to 33 percent who reported a decrease in business. A renewal rate of 90 percent or more was reported.

Rate adequacy and premium potential are top considerations in writing new or rollover programs.

Of the carriers who responded, 23 percent were offering more than 50 programs, while 65 percent had fewer than 20. Some 61 percent of the carriers who responded would give a program one to two years to be successful. About the same number (61 percent) of the carriers reported that they delegate most of the underwriting, while 22 percent delegate all of the underwriting.

The survey did not address admitted versus non-admitted markets, nor premium size per policy. Hitzig said the association expects to conduct the survey annually to capture changes within the marketplace.

The survey was conducted between June 14 and Aug. 3. Respondents included 92 administrators and 34 insurers.