Special Section sponsored by TMPAA

Vendors

As program business has expanded over the years, so has the program administrator’s need for quality products and services from a range of vendors. Vendors have responded, demonstrating an understanding of program administrator issues and a recognition of the potential market administrators represent.

“It’s a growing market,” says Pat Walsh, vice president of INSTEC, a P&C policy administration and rating firm.

Dan Epstein, CEO of ReSource Pro, says, “It’s an entrepreneurial and forward thinking group of individuals. For us, as a provider of insurance process outsourcing services, it’s a good market because everyone struggles with high volumes of data entry and routine data analysis.”

Kelly Drouillard, Brooke Capital Advisors president and COO, brings a lender’s perspective. “Capital has been constricted,” she says. This affects program administrators in a number of ways. “In terms of mergers and acquisitions, for instance, people are more serious about selling than they were a year ago. On the flip side, buyers are more skittish than a year ago. The credit crisis has moved beyond the consumer and sub-prime, into the commercial credit arena.”

Conditions affect vendors, too. “Those companies that sell products and services that improve the bottom line should do well,” Drouillard notes. “If they offer some kind of efficiency or technology, an easier way to do things, that’s a valued service right now.” Vendors need to prove a quick return on investment, because there are not extra dollars right now, she adds.

According to Epstein, everybody is facing similar competitive pressures in the soft market. “Administrators are really focused on renewals. This doesn’t allow them the opportunity to focus on new business development as much as they’d like.” To the extent vendors can help program administrators free up financial and human resources, as his firm does through outsourcing, clients will be better equipped to increase revenue and boost customer service, he adds. “Their expertise is in developing specialized programs and understanding clients’ needs. That’s where they must focus.”

Engaging insureds is another area where vendors can help. “Core insurance processing hasn’t changed much in a long time,” Walsh notes. “You rate, you issue, you handle claims and so forth. A firm can differentiate itself in its presentation to prospective clients.” Walsh describes an emerging technology that has done that in other markets, including hospitality, where hotel booking rates doubled on sites where it has been deployed.

“Called Rich Internet Apps, it’s starting to hit the financial services market,” he explains. The technology allows for faster response than traditional Web technology, and offers a much more sophisticated, more immersive interaction between the user and the site. “It’s cleaner, faster and a lot more engaging. This technology, if it gets into the policy administration space, could do wonders,” he adds.

Looking forward, vendors’ confidence is even stronger. Drouillard sees capital starting to shake loose within six months or so—after the elections and the first of the year. “People will realize they need to get back to business,” she says.

Epstein adds, “Agencies will continue to look for ways to increase capacity, so they can drive faster, top-line growth at a higher profit margin. Those that are able to innovate and improve operational performance, in spite of a difficult market, may be looking more closely at some of the solutions vendors provide.”

Drouillard notes, “The experienced people in this business have been here before. They’re not scared. You’re not seeing them running around with the whites of their eyes showing.” *