As another decade reaches an end and we prepare to welcome 2020 in three months’ time, we glance ahead to what program business might look like at the end of the next decade, an important exercise for the only association solely focused on program administration.
With the advances in technology, AI, availability of data, influx of new capital and continued consolidation, this is an industry segment that could look much different 10 years down the road.
According to the Target Markets Program Administrators Association (TMPAA)’s studies, this decade began with program business accounting for $17.5 billion in commercial insurance revenue in 2010. That number reached $36.1 billion in 2016, with most of this premium written by TMPAA members. It is expected that the 2019 study will put that figure even higher. The results of that study will be discussed at the 19th Annual TMPAA Summit in October.
The association itself has experienced significant growth over the past 10 years, with membership increasing from 312 in 2010 to 472 at the beginning of 2019. Within this total is an increase of program administrator members from 193 to 304, despite the continued high rate of consolidation
What about the future? What will the program industry look like over the next 10 years?
“The program administrator/MGA model will continue to grow in size and importance during the next 10 years,” says John Colis, president of Euclid Insurance Services, Inc. “Over this decade, financial capital will continue to commoditize in contrast to intellectual capital, which will continue to increase in relative importance within the insurance ecosystem. This trend favors the program administrator model, which allows intellectual capital to be decoupled, developed in an entrepreneurial environment, funded by outside capital where necessary and ultimately valued on its own.”
“The increasing importance of data-driven underwriting models over the next 10 years also will favor the continued growth of the MGA space, which is a fertile environment for the development of innovative systems. For these and other reasons, the program administrator model is ripe for growth over the next decade,” he concludes.
From an association standpoint, understanding the coming changes in the program business will be critical to ensure that resources are in place to support the businesses of our members.
To understand and plan for the next decade, Major League Baseball Hall of Famer Yogi Berra said it best: “If you don’t know where you’re going, you’ll end up someplace else.”