Program Administrators (PAs) offer specialty expertise for niche markets on behalf of their carrier partners, providing expertise and services that include underwriting, distribution, policy administration, billing and more. Program business provides an excellent model for underwriting and marketing complex risks, new lines of business or difficult classes, especially in E&S markets.
Program business reached $53.8 billion in premiums in 2020, according to the Target Markets Program Administration Association's (TMPAA) State of Program Business Study 2021. In fact, it's growing more quickly than the overall commercial insurance marketplace. While the size of program business rose 32.8% between 2018 and 2020, says Target Markets, the growth in direct premiums earned for commercial lines increased by only 9.33% over the same period.
Program Administrators are optimistic about the future and growth opportunities, with 83% of respondents in the Target Markets survey planning to introduce new programs in the next two years. Carriers are also bullish on the program business space, with 100% of those polled planning to expand within the next three years via partnerships with either existing or new PAs.
So why should this matter to agencies? Because partnering with a strong PA can expand their footprint in specialized niche markets and help grow their business. Here's how to get started—and get the most out of—working with a PA:
Build a relationship and a go-to-market with a PA in the specialty niche in which you want to enter or grow.
PAs have highly specialized teams of individuals who understand the risks involved in a specific niche. You get the expertise and experience with a PA that you won't have with a general wholesaler.
"It's important to work with a PA who is excellent and top-rated in placing the niche business in which a retailer is interested," says Seth Everitt, National Client Relations Manager, RPS Signature Programs. "Ask the organization's department leader to connect you with the producer responsible for the niche in which you're looking to grow."
PAs will share their capabilities, along with their strengths and weaknesses, and help guide you so that you aren't wasting your resources.
"Once you secure a submission, you want to be able to write it. PAs will help guide you in your prospecting efforts so that when you send in new business, they will be able to place the account," Everitt says.
Once you develop your PA relationship and have sold a few accounts, you'll have built trust and a working partnership that enables you to deliver on your promises in a better way.
Secure a list of target classifications.
A PA will help you focus on specific target classifications. For example, within the construction industry are the highly specialized niche segments of scaffolding and cranes and rigging that come with different underwriting criteria and programs. Partnering with a PA will help you secure the right list that fits the niche's demographics and characteristics of the programs you are offering.
Zoom in on geographic areas that make sense.
A PA can tell you in which geographic areas its programs are most competitive. You can then focus on certain regions to target a specific segment within a niche. For example, let's say you want to target public entities. Within the public entity space, there are a number of segments – from large municipalities to small towns and villages, water districts, parks, schools, etc. A PA may have a program that's ideal for small municipalities in a specific region that is aligned with your objectives, making it a marketing fit for both you and them.
Work with a partner who knows what questions to ask and will help you get client-ready.
PAs know all the questions to ask for their particular niche specialties and the programs they offer.
"A PA will tell you which apps to complete," explains Everitt, "and advise you on the questions to ask, along with any potential underwriting hurdles or pitfalls that may arise before you visit with a client. You want to be able to answer a client's questions and be prepared for any obstacles that may come up, whether they have to do with the location of the account or specific classifications within the niche that require additional information. The job of a PA is to make you look as good as possible in front of your clients. That's when everyone wins."