There is a growing sense of optimism amongst the specialist market MGAsand Program Administrators in the United States for the prospects into 2011 and beyond a survey has found.

Reinsurance broking giant Guy Carpenter published the results of its yearly survey of the Program Administrators and Managing General Agents (PA/MGA) market, which is said provides a benchmark study of key industry issues.

The report, the Sixth Annual Specialty Insurance Program Issuing Carrier Survey found 90 percent of the survey participants estimate the total PA/MGAmarket to be at least $20 billion in gross written premium (GWP), approaching the 2008 peak of 92 percent. Approximately one-third believe the market to be greater than $40 billion in GWP, the highest level in the six years that Guy Carpenter has conducted this survey.

Bob Kimmel, Head of North American Programs, at Guy Carpenter said: “The Program Administrators and Managing General Agents market continues to demonstrate resilience, consistency and strength as it progressively shows signs of recovery and stabilization. Over the past five years, we have witnessed several significant shifts indicating that the market has matured, from the growth in the number of carriers entering the space and number of MGAs shifting to writing specialty-driven lines from more commodity-driven lines, to the increased sophistication of MGAs as they focus on more complex commercial risks using cutting-edge analytical and underwriting tools.”

The survey found market stability remains the prevailing observation among those surveyed, with 59 percent seeing virtually no change in PA/MGA market size, 23 percent forecasting growth and 18 percent expecting it to shrink.

However the view of underwriting performance is a little different with 30 percent estimating a market-wide combined ratio of over 100 percent – a drastic change from 8 percent in 2009. The majority (71 percent) estimate a program market combined ratio of 90 percent to 100 percent, compared to 92 percent last year.

In terms of challenges only 42 percent see premium growth as a challenge, falling from 58 percent last year and 66 percent in 2008. In all 51 percent of the respondents report that new business production is a challenge, compared to 67 percent in 2009 and 77 percent in 2008.

Rating levels continue to be of concern for the PA/MGA market, climbing to 71 percent this year, up from 61 percent in 2009 and 58 percent in 2008.

Reinsurance continues to play an important role for program issuing carriers. Only 5 percent report that they work exclusively with direct reinsurers, with 35 percent working with reinsurance intermediaries and 60 percent using a combination of intermediaries and direct reinsurers.