One80’s Pesce: Diversified portfolios help PAs navigate softening pressures

As the market transitions from the recent hard phase, MGAs and program administrators that have diversified portfolios are better placed to maintain profitability amid softening rates, according to Chris Pesce, national programs leader at One80.

The executive highlighted areas like small casualty and professional liability products that are in a softening market as well as workers’ comp, which hasn’t been in a hard market for some time.

“If you're a myopic program administrator that only has a few select programs, and you happen to be in those spaces, you're going to be really struggling,” Pesce told The Insurer TV during an interview at the 2024 Target Markets Program Administration Association’s Conference.

”But if you're diversified, and you have property and you have large casualty, or package programs in different industry segments, then you're going to see a smoother result,” he further explained.

He also noted shifting reinsurance market conditions, with renewals coming in flat or with some decreases.

On insurance pricing, he added, “we've had a hard market for quite a while, [a] kind of a market correction, which we all know comes to an end at some point… And we're kind of on the leading edge of that tipping point where the rates are starting to get a little pressured.”

Pesce said that few are immune to a softening market and the headwinds it presents. For One80 however, he suggested that having expertise in a multitude of verticals can be an advantage during challenging times.

“The way we solve for that is really through diversification,” said Pesce. “I don't care how good of an operator you are -- you can't have every program batting one thousand all the time.”

One80 is a national programs administrator headquartered in Boston, Massachusetts. The company boasts a wide variety of products for its growing client base and their needs.

“We really try to maintain a diverse portfolio where the different product bases are peaking at different times,” Pesce explained. “And when you look across that portfolio, our goal is to just maintain nice, steady, reliable growth and really try and take the highs and lows out of the volatility of the swinging markets and we've been very successful with that.”

Against the grain of market dynamics, the tone at this year’s conference in Scottsdale, Arizona is rather upbeat, according to Pesce. The insurance veteran previously served as president for TMPAA, the industry group hosting its annual summit.

“This meeting is [a] record attendance, and so I think the interest in the program space continues to build,” Pesce noted.

“We have more carriers than we've ever had attending, and we have more program administrators than ever attending,” Pesce goes on to say. “The association has done a great job,” he added.

Watch the seven-minute interview with One80’s national programs leader Chris Pesce for a temperature check into how administrators are faring amid a challenging market, what emerging risks can the program sector aid in combatting, as well as a discussion about the practical application of artificial intelligence.