The average size of programs targeted by carriers has changed to reflect economic, rate adequacy and expense factors. Carriers remain more flexible with their program minimum premium requirements, their willingness to consider startup programs, their willingness to front and the territorial scope in which they are willing to write business.
Targeted Program Gross Written Premium (GWP) and Geographical Preference
This year the overwhelming majority of respondents are targeting programs in the GWP USD10 million to USD15 million range (50 percent this year compared with 47 percent in 2012). The percent of respondents targeting programs larger than USD15 million (25 percent) rose dramatically by more than half (9 percent in the previous survey).
In 2006, 65 percent of program carriers responding to our survey wanted regional- specific programs while this year the percentage wanting regional-specific programs declined significantly to 25 percent. Those looking for state-specific programs increased notably to 25 percent from 3 percent over the prior three surveys. National programs represented 25 percent of respondents in 2006 - but since 2009 they have dominated territory preference coming in at 50 percent this year.
Beginning in 2011 we queried carriers about their interest in programs or fronting opportunities to see what, if any, interest there was in these two potential revenue-generating areas. In 2014 a majority of the respondents (81 percent) said they would be willing to consider start-up programs, while 25 percent would consider fronting opportunities. Understanding that all start-ups can be different and not all fronting structures are the same, it was somewhat surprising to find this level of continued interest in these two program areas.
As account premiums and program sizes have shrunk, program carriers realize they need to be more flexible in their approach to generating program related revenues. This year’s survey indicates that they are now considering smaller programs, larger territorial scopes, start-up programs and fronting opportunities in order to grow, or to at least maintain, a reasonable market share.