Program Profitability, key focus for today’s P&C specialty leaders

Team VIPR recently attended the Target Markets Annual Conference (TMPAA) in Scottsdale, Arizona. This year’s event brought together almost 2,000 attendees, including more than 1,000 carriers, MGAs, and brokers.

The packed schedule of back-to-back meetings and insightful conversations created a real buzzing atmosphere from Day 1, highlighting a crucial theme: data is increasingly essential for driving profitability in program business. With a specific focus on data quality, accessibility, and accuracy, discussions centered on how harnessing the right data is key to better managing portfolio risk.

The conference began with a relaxed yet engaging start on October 20, as the VIPR team joined over 120 golfers, creating a fantastic community spirit to kick off the event. From there, the pace only picked up, with more than 30 meetings emphasizing how technology can transform data processing and risk assessment for MGAs and carriers. 

Market Growth and Resilience

As stated by a recent Conning report, there is strong evidence of growth across the program sector. According to the report, program business has grown significantly, with MGAs expanding from just 146 in 2014 to nearly 900 in 2023, and premium volume in the U.S. MGA market reaching a whooping $102 billion in 2023. The report also highlighted that insurers and reinsurers working with MGAs have nearly quadrupled, demonstrating a strong trend towards specialization and innovative risk distribution.

The U.S. surplus lines market also reflected this upward trend, showing a 10.1% premium increase in 2024 compared to the previous year, largely driven by commercial liability and commercial property coverage. Specific states like Florida and California saw robust growth, especially in high-risk areas affected by natural disasters and climate-related events. With admitted insurers often retreating from these sectors, the surplus lines market has been able to step in, demonstrating remarkable adaptability and resilience.

VIPR’s proprietary technology, initially introduced in 2009 to address regulatory and compliance needs, has evolved alongside these trends. Today, it serves as a dynamic tool that helps program business players leverage data for better decision-making, enhanced risk management, profitability and straight-through-processing.

Trends and Challenges

At the recent TMPAA Annual Conference, attendees listened to Dr. Robert P. Hartwig, Ph.D., CPCU, whose expertise in risk management and insurance market structures offered valuable perspectives. Dr. Hartwig emphasized the evolving challenges in the insurance landscape, including the impacts of catastrophic losses and shifts in capital availability. His insights into economic conditions affecting the industry were particularly relevant, as insurers navigate complex factors like increasing natural disasters and shifting capital markets.

Catastrophic (cat) losses in H1 2024 accounted for 9.1% of losses, underscoring the need for effective risk assessment and proactive strategies. Profitability remained strong, with the industry reporting $39 billion in profits in 2023, and an impressive $45 billion for H1 2024. However, projections for H2 show potential challenges due to hurricane season and heightened risk exposure.

As Dr. Hartwig noted, profitability in the excess and surplus (E&S) market continues to drive industry growth, especially as the market adapts to fill gaps left by standard lines. The E&S market is experiencing significant gains, largely driven by non-admitted business and a strong emphasis on niche markets and specialty lines, which are growing faster than traditional admitted markets.

The program sector’s growth trajectory is promising, with forecasts projecting a trillion-dollar valuation this year, increasing to $1.1 trillion by 2025. However, this growth is accompanied by challenges, including an increase in credit downgrades, with 55 in 2023, predominantly in personal lines due to underperformance and weakened balance sheets. These downgrades reflect underlying pressures that require insurers to rethink traditional approaches and turn to data-driven solutions.

Reduce processing times from days to just minutes

In the midst of these dynamics, VIPR’s technology resonates with carriers, MGAs, and brokers looking to enhance their data capabilities. Team VIPR had a lot of valuable conversations, with attendees particularly interested in how VIPR’s ecosystem can process their bordereaux data in less than 3 minutes instead of 4-5 days manually. Another area of interest was automatic reporting and transforming bordereaux data into actionable insights, reducing processing time from days to just minutes. This level of efficiency and sophistication is invaluable for program managers striving to balance profitability with compliance and risk management.

VIPR’s Commitment to Innovate and Impact

VIPR, recognized as the global leader in delegated authority data processing, automation, and analytics, is proud to be at the forefront of this transformation. Recently named among BusinessCloud’s InsurTech Top 50, VIPR is leading the charge to streamline delegated insurance operations across 5 global markets.

CEO Paul Templar’s recent interview with The Insurer highlighted VIPR’s vision, while U.S. Advisor Greg Massey’s feature on The Voice of Insurance podcast reconfirmed the importance of automating.