The program distribution landscape is changing, with traditional retail and wholesale channels increasingly merging into program distribution. This shift is driven by new fronting carriers seeking efficient ways to deploy their resources. Chris Pesce, president of One80 Programs at One80 Intermediaries, noted that the growth in this sector is expected to continue.
In a recent statement, Pesce confirmed that the distribution of program business is expanding. One80 has been tracking this trend through a recurring survey, which shows consistent year-over-year growth in program business over the past twelve years. Although the latest survey results are not yet available, early indicators suggest that this trend will persist.
The rise of fronting carriers, which do not have their own retail arms, is a significant factor in this growth. These companies rely on external administrators for market access, which is fueling the expansion of program distribution. Pesce explained that this reliance on external partners is reshaping how program business is defined, moving away from narrow specializations that have historically characterized the market.
One80 has embraced this shift by developing niche verticals, such as cannabis and marine insurance. However, Pesce pointed out that fronting models do not necessarily require such specific expertise. This could lead to a broader range of offerings within the program space, as companies may pursue less specialized lines of business.
While specialization has traditionally been a key to success for program administrators, the introduction of fronting companies may change that dynamic. As more carriers enter the market, the need for deep specialization could lessen, allowing for a wider variety of programs. This could result in broader portfolios that cater to a wider audience, as capacity becomes more accessible.
Pesce emphasized that while specialization remains important, it is no longer the only pathway to success in program distribution. Administrators aligned with fronting carriers might find opportunities to move lower-margin or simpler products into the program model simply because that is where the market is heading.
The program distribution landscape is vibrant and evolving. Companies that adapt to these changes will thrive, while those that do not may struggle to keep up. The future of program business looks promising, with new opportunities arising as the market continues to evolve.