NU Online News Service, Oct. 15, 10:28 a.m.EDT

Most program business insurers believe gross premiums for thesegment total at least $20 billion, but a growing number now havedoubts they are doing that much volume, a survey reported.

Those findings were included in Guy Carpenter's fifth annualsurvey of domestic insurance carriers writing specialty programbusiness through managing general agents and other programadministrators.

Seventy-six percent of respondents pegged the current MGA/PAmarket size at $20 billion in gross premiums or higher.

While the figure represented more than three-quarters of theissuing carriers responding to the survey, it was a considerabledrop from the 92 percent who said the market was at least $20billion in the prior survey published in May 2008.

The latest survey published last week shows that 24 percent ofrespondents believe the market is less than $20 billion, comparedto only 8 percent in 2008.

At the top end of the scale, roughly 20 percent of respondentscontinue to believe that the market is $40 billion or higher--afigure that is consistent with the prior survey in 2008.

Between the two extremes, 29 percent of those responding to thesurvey this year said the market is somewhere between $30 billionand $40 billion, while 38 percent placed the figure in the samerange in 2008.

Roughly 27 percent said the market size is $20-$30 billion ingross premiums in this year's survey, compared to 33 percent in2008.

This year's survey also revealed that fewer program carriersbelieve they are part of a growing market than they did in therecent years past. Only 37 percent are forecasting marketgrowth.

The figure hasn't been that low since Guy Carpenter's May 2005survey, when only 38 percent saw growth ahead for the MGA/PAprogram market. In the September 2006 survey, the figure leapt to65 percent, and in the most recent prior survey--published in May2008--56 percent of carriers surveyed had predicted a growingmarket.

In this year's survey, the most common response was that themarket would remain flat, with 46 percent believing this to be thecase, while 17 percent foresee market shrinkage.

Responses to many other survey questions--about challengesfacing the market, targeted program sizes and business lines, andrequired MGA/PA services--were generally consistent with priorsurveys.

One notable exception involved the compensation of reinsuranceintermediaries for bringing new opportunities to carriers.

Last year, 100 percent of the respondents said they wouldcompensate intermediaries--either by paying a finders fee orincreasing MGA commissions to include a provision for theintermediary.

This year, 18 percent said they would do neither, the GuyCarpenter report noted.

Asked to list their top five challenges, carriers highlightedmany of the same concerns as they did last year, with new businessproduction remaining the No. 1 challenge (selected by 66 percent ofrespondents), followed closely by the challenge to maintain currentrate levels (61 percent) and the challenge to maintain or increasepremium (58 percent).

Roughly 40 percent listed the entrance of new market competitorsamong their top five challenges, up from about 30 percent in theMay 2008 survey.

The full report and blog entries summarizing sections of thereport are available on Guy Carpenter's intellectual capital Website, www.GCCapitalIdeas.com.