Program Managers Find Themselves Back in the Driver's Seat

Summary

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To get a sense for how the program-business market is changing,several program administrators were contacted, and they discussed the opportunities and challenges now facing them. The softening market is giving program administrators more options for writing business, according to Geoffrey McKernan, president and CEO of NSM Inc, but it is also creating challenges in regard to carrier selection, IT management and maintaining profitability. One of the consequences of the changing insurance marketplace could be increasing consolidation among program administrators, according to Art Seifert, president and CEO of The Lighthouse Cos. Proof that start-up programs are now possible can be found at National Specialty Underwriters (NSU), where President Chris Randall reports that NSU recently launched a new program for medical imaging facilities. The program insures the facilities and operators of medical-imaging equipment but not doctors.

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Extract

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Program Managers Find Themselves Back in the Driver's Seat

WHAT a difference a couple of years make. In 2003, as premiums rose in the hard market, program administrators had it made-if they had access to insurers. The problem was that many didn't. Carriers fled the program business market or, in several well-publicized cases, were forced into bankruptcy by bad underwriting results. Given the dearth of markets, program managers were left scrambling to find homes even for programs that were proven profit-makers. Startup programs, meanwhile, were all but outlawed by most insurance companies.

Today insurers have turned the spigot back on. Carriers are wooing program administrators as they haven't since the late 1990s. Insurers are willing to broaden coverage, and a program administrator with a proven track record and a new idea for a program can find a receptive audience for it.

But while the challenge of finding a market has largely evaporated, others have taken its place. Program administrators face increasing costs for such expenses as marketing and IT support. In some lines, premiums are under growing pressure. Even the Spitzer investigation could become a concern.

To get a sense for how the programbusiness market is changing, we contacted several program administrators, who discussed the opportunities and challenges now facing them. Following are their comments.

Geoffrey McK...

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