NU Online News Service, May 4, 11:00 a.m. EDT--The specialty program market appears primed for expansion as carriers more aggressively seek new business, according to results of a survey by Guy Carpenter & Company Inc.
In its inaugural survey of domestic insurers that write a significant amount of program business through program administrators, Guy Carpenter found that the market appears ready for expansion, provided that current rates can be maintained and that program information is sufficient and reliable.
The survey, said Carl Bach, vice president of Guy Carpenter's Program Manager Solutions Specialty Practice, can be used to provide "valuable insight" into the expectations and requirements specialty program carriers have for their program administrators.
"It is our hope that by understanding these needs, participants in the specialty program marketplace will be able to work that much more efficiently and effectively," Mr. Bach said.
Additionally, the response to the survey showed increased activities and opportunities for specialty program carriers, including the emergence of new markets, new program administrators and new products. The survey also showed an increase in merger and acquisition activity and in the number and variety of third-party service providers, as well as a rise in the use of alternative risk mechanisms.
Those responding to the survey estimated they will write between 70 and 80 new programs during 2005, with 38 percent of specialty program markets increasing this year. Specialty program carriers indicated little preference between different types of programs in terms of geography. Both national and single-state programs were preferred by 30 percent of respondents to the survey, and 40 percent preferred regional programs. Additionally, the survey showed these preferences to be driven more by underwriting decisions than licensing issues.
Respondents were also divided on how, and more specifically where, claims should be handled. The use of third-party claims administrators is a requirement for 40 percent of those carriers responding to the survey, while 35 percent said that they prefer to keep claims administration in-house. An additional 25 percent of respondents said they require the use of an in-house claims department.
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