"It is amazing what has happened in a year," says Terri Moran, vice president and director of marketing for AIG Programs. "It was only a short time ago that carriers exited the program arena, and already some are back and there are new entrants. However, I would suggest that program administrators approach new capital or re-entrants cautiously and do their homework so they are not in a position of having to re-market the program again in a few years."

Moran says that there are a number of factors to consider now that the market is in a transitional state. She says program administrators should ask themselves:

"What is the insurance carrier's expertise in program business? Is this one of the carriers that exited the market just a few years ago and now, because results have been positive, is ready to re-enter? A program administrator should ask himself or herself what this carrier will do in the future. Program business requires a completely different understanding and expertise, and a program administrator should want to make sure the carrier is committed to program business for the long term. Therefore, longevity is certainly a factor to consider. There are many advantages to continuing a long-established relationship even as someone new dangles that carrot, perhaps with promises not yet proven."

Because programs tend to be written for tougher, long-tail business, Moran says program administrators must be certain the carrier under consideration has the staying power to be there when the claims need to be paid. "We at AIG have taken the position that brokers and insurance buyers need to look at all of the ratings in addition to the financial strength ratings. A carrier may seem solid on the surface with a financial strength rating of A or A-, but if you look deeper, you may find it holds a long-term debt rating of BBB-. I would suggest comparing all the ratings of a few of the long-standing carriers that are no longer in business as a case in point."

A key success factor for program administrators is their keen knowledge and understanding of the programs they manage, Moran comments. "The business you insure will change over time and, if not the business, certainly the environment around the business will change whether by regulation, customer demands or some unexpected event or situation, including another insurance carrier entrant. Does your carrier have the ability and desire to grow and change as your customer group grows and changes? Is your carrier nimble enough to move quickly in terms of new products so that you can keep and continue to grow your client? Is your carrier dedicated to the specific client base? Choose your partner wisely. Your business and the program business model's reputation depend on meeting your client's needs."