Specialty program markets actively seeking new business

Specialty program markets appear to be actively seeking profitable new business, both from new program administrators and existing partners, by building product and volume, according to a recent survey by Guy Carpenter & Company LLC.
The survey canvassed an undisclosed number of domestic insurance companies that write specialty program business through program administrators.
Issuing carriers were asked about their appetites for program business, touching on program administrator criteria, claims administration requirements, monitoring and control practices, reinsurance purchasing practices and views of specialty program market conditions.
According to the survey results, 50% of respondents estimated the size of the program
administrator specialty program market segment at US$20 billion to US$30 billion of annual gross written premium, with the remainder of respondents split between less than US$20 billion (27%) and greater than US$30 billion (23%).
These numbers indicate a perceived smaller market size than noted in last years survey, Guy Carpenter noted in a press release announcing the survey results.
In addition, 48% of respondents described themselves as writing specialty programs exclusively, as compared to 65% of respondents who said the same thing in Guy Carpenters 2006 survey.
Among the surveys other key findings:
carriers are continuing to look for growth across most commercial lines of business, including general liability, property, auto, professional and inland marine. One of the most notable changes from last years survey was in umbrella liability, in which only 26% of respondents are looking for growth (versus 65% last year);
the survey indicated a lessening interest from responding companies in growing their personal lines programs, with 60.8% of respondents indicating a desire to grow personal lines, as compared to 65% in 2006. Interest in homeowners growth dropped 28% from a year ago, while umbrella decreased 13%; and
responding carriers are becoming more flexible in their use of third-party administrators (TPAs) to manage claims, according to Guy Carpenter. Forty-two per cent of responding carriers said they would not allow the use of a program administrator-owned TPA, although this figure is down from the more than 75% who said it was not acceptable in 2006. Even so, only 31.8% of respondents reported allowing the use of TPAs (down from 45% in 2006).