Inside the booming programs market in the US

It is currently growing three times faster than the standard P&C market

Inside the booming programs market in the US



The programs market in the United States is currently growing three times faster than the standard property and casualty market. In our latest episode of IBA Talk, we sat down with Tracey Sharis, senior vice president at Liberty Mutual Global Risk Solutions North America Programs, and colleague Bryan Marks, programs distribution director, to discuss key trends in the programs market today and how program providers can set themselves apart in the crowded marketplace.

Sharis began by explaining how there are many factors that drive growth in all the different segments of the insurance business. Today, there are a few key themes as that growth in the programs space far exceeds that of the standard P&C market, the first of which is a notable increase in the amount of MGAs and program administrators moving away from what was traditionally the accepted format of a single carrier underwriting agreement on a program. As a result, she said, diversification occurs quite organically and the distribution partners which the program administrators seek tend to have more than just one option.

“Tracy touched on it,” said Marks when asked for his perspective from the distribution side. “We’re really seeing tons of opportunity in the distribution space and we’re really trying to bucket it from a strategic standpoint of large wholesalers … the MGAs and MGUs, you know, as a second bucket. Large retailers have affinity practices, have association groups. They are aggregating business from their standpoint as well. And then our reinsurance community has developed MGA and MGU practices where they’re taking these underwriting experts to market and trying to match them up with capacity and carrier providers.”

As the programs market continues to grow and crowding becomes an issue, Sharis holds that much of what makes a great program administrator also makes a great program carrier. One of the top issues right now across the industry, she explained, is the use of technology, often generally referred to as insurtech, to transact business. In her opinion, Sharis thinks that if a company is not focused on improving their technology, be they a carrier or a PA, then they might be a bit behind the curve and need to focus on that today, with the fear being that they would be left behind in such a competitive landscape.

“We are moving, on our side, closer and closer to straight-through processing and getting to a point where business transactions are as frictionless as possible. We like to partner with program administrators who also differentiate themselves in that way, and we’re trying to get to a point where, again, there’s as little friction on the transaction-by-transaction phases as possible,” said Sharis. “Not only is that going to translate ultimately into savings for everyone on the expense side, but, more importantly, it’s going to translate into better sight lines and more current sight lines and up-to-date sight lines into the business. That is extremely important when we look at which program administrators we want to align with because we are looking for partners who are focused on long-term growth and sustainable profitability. And without sight line into the business — from both the program administrator and the carrier sides of the relationship — you’re not going to have a tremendously successful recipe for long-term growth and profitability.”

In complete agreement, Marks added that this goes beyond just having underwriting expertise or being in that niche of business for a little bit and aggregating a book of business — it’s becoming much more sophisticated. In his opinion, the PAs and MGAs are looking more and more like insurance companies without the risk on their balance sheets. As such, sophistication is truly the factor that is setting companies apart and influencing market trends.

Talent retention and acquisition is also of key importance during this somewhat turbulent period of pandemic-induced talent turnover rates coupled with simultaneous industry growth. When asked about this, Sharis throws in her two cents.

“The first thing that we are insuring is that we have a clear, go-forward strategy — and I think it’s very difficult for any industry to attract talent to an area that does not have a clear go-forward strategy,” said Sharis. “Our go-forward strategy is really predicated on four things: one is product selection; another is that technology enablement we just spoke about; strategic engagement is the third; and the fourth — and honestly, for my money, the most important — is our human resources, our talent, our people. Without our people, our business doesn’t run at all and without good people, it doesn’t run in a successful and profitable way. We are very fortunate in recent months … since the group was set up as one programs organization to not only retain talent, but to attract new talent.”

To learn more about Liberty Mutual North America’s comprehensive insurance solutions, click here.

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