Program Business Premiums Topped $36 Billion in 2016

Industry revenues up over 10% in past two years, study reports

Wilmington, DE—The financial performance of commercial property casualty insurance program administrators continues to outpace the performance of the overall property casualty insurance markets. Program business premium revenue increased by 11.7 percent reaching $36.1 billion in 2016, up from $32.3 billion in 2014.

The Target Markets Program Administrators Association (TMPAA) released the results of its annual research to document the size, characteristics, growth and other baseline information about the program insurance market. “The State of Program Business Study” was presented at the Association’s 17th Annual Summit in Scottsdale, AZ.

Since its initial study seven years ago, program business insurance revenues more than doubled. The first study reported $17.5 billion in commercial insurance premium revenue in 2010. Today, it is $36.1 billion.

Additional key findings in the just-released study include:

  • The number of insurance programs remained constant with approximately 2,100 programs and 1,000 program administrators despite significant mergers and acquisitions in the segment.
  • The rate of growth in the program industry—more than 5.3 percent from 2014—substantially exceeds the growth rate of the commercial lines market. The overall commercial insurance industry posted a 1.3 percent increase during the same time period.
  • Forty-two percent of PAs now offer cyber coverage, 14.7 percent in base coverage, 28 percent as an optional endorsement.
  • Almost half of the administrators polled are looking to acquire other firms.
  • The study reports that data collection and analysis continues to garner increasing interest among program administrators.

TMPAA president-elect and CEO of Maritime General Agency, Chris Pesce, indicated, “The specialization of program business continues to drive results that outpace the market. Entrepreneurial program administrators are poised to take advantage of opportunities created by leveraging technology, increased use of data analytics and exploiting new program niches.”

The research study was sponsored by Allied World, Ironshore, NetRate Systems and Allianz.

The TMPAA defines program business as insurance products targeted to a particular niche market or class, generally representing a book of similar risks placed with one carrier. Program administration includes product marketing, underwriting selection, binding, issuing, and may also include billing, premium collections, data gathering, claims management/loss control and risk sharing. Specialists distribute these programs on a retail, wholesale or direct basis.

The study was conducted by the research firm Advisen and was released at the Association’s 17th Annual Summit on October 16. The analysis is based on the survey of program administrators and carriers. More than 200 program administrators and program carriers responded to the survey. Additional analysis was drawn from the Advisen databases of retail brokers, managing general agents, underwriters and wholesale brokers. Advisen is a member of the TMPAA.

The full “State of Program Business Study” report is available for TMPAA members. Others who wish to obtain a copy of the study should contact the Association.

View Executive Summary

MEMBERS: Click here to access the 2017 State of Program Business Study.