Program business produces more than $53.8 billion in premium in the insurance market annually, according to Target Markets,* the association for program administrators. The continued success and growth in program business have more hybrid-fronting carrier models being created to support managing general agent (MGA)-produced niche programs. Let's look at the most popular new model.

What Is a Hybrid-Fronting Carrier Model?

At its core, fronting is a reinsurance arrangement between a regulated, admitted, licensed primary carrier in the U.S. and an offshore reinsurance entity such as a self-insured organization or captive.

With a pure reinsurance agreement, the self-insured or captive insurer retains the risk of loss. But in the hybrid-fronting model, the primary carrier assumes a percentage of the risk, ranging from as low as 5% up to even 30% of the risk.

Analytics and Technology Deliver Greater Confidence in the Program Space

The hybrid-fronting carrier model has continued to evolve over the last five years, as carriers become comfortable enough in the program business space to provide some financial capacity and participate closer to the primary solution.

MGAs bring curated distribution supported by specialized underwriting expertise, which hybrid-fronting carriers recognize. It's an opportunity for the hybrid-fronting carriers to support a portion of the risk with additional capital, while partnering with MGAs and program administrators to access and participate in the marketplace through additional distribution avenues.

Hybrid-fronting carriers can choose to support a national or regional program, or opt to focus on a portion of a program. The evolution of analytics and technology in the insurance industry has brought greater confidence to reinsurers and enabled the hybrid fronts to serve as a vehicle on their behalf to access markets in the U.S. in the program and MGA space.

Hybrid fronts provide the same level of due diligence as standard and program carriers. They engage in thorough analytic and exposure reviews before deciding to participate in a program. They also evaluate the program's pricing and the depth of an MGA's underwriting expertise in the space and its ability to run the program as well as assess its rate, quote, bind services.

The setup of hybrid-fronting carrier model is critical. This setup includes:

  • Its pool arrangement and the ability to diversify across multiple programs
  • How much risk it's ceding and assuming
  • The support and appetite of its reinsurers
  • How well the carrier has vetted the program it's interested in supporting
  • Its oversight ability to ensure the maintenance of the program

Some hybrid models are not only participating in the risk. "Active" or "platform" carriers are also becoming more involved in the design of the MGA programs, with some even building their own programs.

RPS Signature Programs offer more than 40 diverse programs generating annual premiums of $800 million, including the following:

  • Programs in the medical and non-medical space
  • Commercial multi-peril
  • Specialty
  • All lines aggregate solutions for nonprofits
  • Primary and excess coverage for public entities
  • Workers' Compensation
  • Country clubs and amateur sports

RPS works with traditional carriers, program-focused carriers and hybrid-fronting carriers to help you come through for your clients.


*Target Markets, accessed 9 Sept 2022.