June 20th, 2013

Specialty Insurance Program Market Poised for Growth Opportunities in 2013

Posted at 5:04 AM ET

Guy Carpenter & Company today released the findings of its eighth annual Specialty Insurance Program Issuing Carrier Survey. The survey, which analyzes trends and benchmarks movement in the Program Administrator and Managing General Agency (PA/MGA) market, reveals that the PA/MGA market continues to thrive and is well-positioned for growth in the year ahead.

Over the last eight years, Guy Carpenter has polled respondents at traditional insurance companies that have specialty program operations as well as true, specialty insurance carriers. Notably, this year saw the highest percentage of traditional carrier respondents (77%) since the survey’s inception in 2005. Participants included agencies, underwriters, reinsurance intermediaries and third party service providers (such as claim administration firms). The published briefing, titled Poised for Growth, provides year-over-year results and analyses of the current program marketplace from the program issuing carriers’ perspective.

Selected key findings from this year’s survey include:

  • The top challenges facing the PA/MGA market are maintenance of rate level (62%) and new business production (44%). Other challenges include professional submissions (38%) such as updated loss information, premium data and financial information on the PA/MGA market, maintaining volumes (32%), systems (29%), PA relationships (29%), new competitors (15%), and commission levels (6%).
  • Reinsurance continues to play an important role for program issuing carriers. Compared to last year, the use of both direct reinsurers and intermediaries increased (up to 76% from 66%).
  • While the majority of respondents believe that the PA/MGA market is smaller than it has been in past years, 65 percent believe, optimistically, that a shift in the industry will occur and the market will grow (65%) in 2013.
  • Even though carriers continue to be interested in making acquisitions, respondents indicated less interest in growing through acquisitions compared to last year (44% and 56% respectively).

“The results from this year’s survey indicate the continuation of a thriving PA/MGA market. Based upon the results, we are seeing an emergence of themes on change, flexibility and growth, that reflect a positive outlook for the year ahead,” said Bill Harris, Managing Director of Specialty Programs at Guy Carpenter. “We look forward to seeing further collaboration between the PAs / MGAs and their carrier counterparts as they work together to achieve mutual growth and profitability in this vibrant insurance market segment.”

Click here to read the full briefing >>

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