Guy Carpenter Publishes Second Annual Survey of Specialty Program Issuing Carriers Survey Finds Continued Market Growth, Increasing Appetite for New Business

New York, September 13, 2006 – Guy Carpenter & Company, Inc., the leading global risk and reinsurance specialist and a part of the Marsh & McLennan Companies (NYSE: MMC), today announced the publication of its second annual survey of domestic insurance companies that write substantial specialty program business through program administrators. The survey, conducted by Guy Carpenter�s Program Manager Solutions Specialty Practice, provides an overview of issuing carriers, their program appetites, program administrator criteria, claims administration requirements, monitoring and control practices, reinsurance purchasing practices and views of specialty program market conditions.

The survey indicates that the program administrator specialty market continues to grow, with more than 65 percent of respondents estimating the size of the program administrator specialty program market segment at between $20 billion and $40 billion of annual gross written premium. A substantial majority of this year�s survey respondents (65 percent) describe themselves as writing specialty programs exclusively, up from less than half (48 percent) of respondents last year.

Though specialty program writers cite new business production as their greatest challenge, prospects for future growth are bright, with 65 percent of survey respondents viewing program market results over the last three years as more profitable than the standard market. More than half of all respondents indicate that they see market conditions remaining consistent through 2007.

“Across the specialty programs segment, we are seeing new opportunities developing, from both existing business and new players entering the market,” said Carl Bach, Senior Vice President and head of Guy Carpenter�s Program Manager Solutions Specialty Practice. “By providing greater insight into what specialty programs carriers are seeking, where market opportunities are and what program carriers require from their program administrators, we hope to help all participants operate with maximum efficiency as they build their business.” Among the survey�s other key findings:

  • Market evolution and growth: The specialty programs market continues to change and evolve rapidly, with the introduction of new markets, new program administrators and new products, as well as a rise in merger and acquisition activity, an increasing number
    and variety of third party service providers and more frequent use of non-admitted paper
    and alternative risk mechanisms. Underscoring their commitment to this market segment,
    respondents are projecting that they will write a total of at least 80 to 100 new programs
    in 2006.
  • Increasing appetite for new business: Specialty program markets are actively seeking profitable new business, as they increase underwriting activity across multiple
    commercial and personal lines. On the commercial side, all respondents noted an appetite for general liability insurance, with a majority also indicating an appetite for property, inland marine, automobile liability, professional liability and umbrella liability. The most significant change from 2005 is evidenced in commercial umbrellas, with some 65 percent expressing a willingness to underwrite that line, compared with 52 percent last year. With respect to personal lines, only 30 percent of respondents indicate a desire to write homeowners, 25 percent indicate an appetite for auto and 10 percent for umbrella.
  • Geographical preferences: Responding carriers seem to vastly prefer programs that are regional (65 percent) over national (25 percent) and single-state (10 percent)
    programs. This is a dramatic shift from 2005, when respondents were fairly evenly split, with preferences divided among regional, national and single-state programs. It appears that respondents� geographical preferences are more a function of underwriting decisions rather than licensing issues.
  • Claims administration preferences: While many carriers continue to feel that their in-house claims departments have the experience and expertise to manage specialty
    program claims, there appears to be more flexibility with respect to the use of third party administrators (TPAs). While 40 percent prefer to use their own in-house claims department, 45 percent always use a TPA. This year, only 15 percent of respondents indicated that they require the use of their in-house claims department, compared to 25 percent last year.

Copies of the survey results are available for download at

About Guy Carpenter & Company, Inc.

Guy Carpenter & Company, Inc. is the world’s leading risk and reinsurance specialist and a part of the Marsh & McLennan Companies, Inc. Guy Carpenter creates and executes reinsurance and risk management solutions for clients worldwide through 2,600 professionals across the globe. The firm’s full breadth of services includes 16 centers of excellence in Accident & Health, Agriculture, Alternative Risk Transfer, Environmental, General Casualty, Investment Banking*, Life & Annuity, Marine and Energy, Professional Liability, Program Manager Solutions, Property, Retrocessional, Structured Risk, Surety, Terror Risk and Workers Compensation. In addition, Guy Carpenter’s Instrat® unit utilizes industry-leading quantitative skills and modeling tools that optimize the reinsurance decision-making process and help make the firm’s clients more successful. Guy Carpenter’s website address is