A Safety Valve

The surplus lines industry is traditionally thought of as a safety, or relief valve for the insurance industry as a whole. But what does that mean? To find out, read on, because what we have here is everything you ever wanted to know, and more, about surplus lines—all presented by people who definitely know the business.

When I first started working at Insurance Journal, I hadn’t a clue as to what an Excess and Surplus insurance carrier does or what a surplus line is (excess verbiage to be chucked by a ruthless, sharp-eyed editor?)—and it took a long time to get a grip on the terminology. I still don’t in any way, shape or form think I’m an expert on the subject, but after reading the contributions to this special issue by people who really are experts, I feel far more knowledgeable than I did at the outset.

Dave Thomas, senior writer with Insurance Journal-West, gets everything rolling with a Q&A session with Swett & Crawford chairman, David Hartoch. Hartoch, who’s set to retire in December reflects on the state of the industry and where it’s headed.

U.S. Risk’s Monte Stringer takes us through a history surplus lines, examining how the sector came to hold its place as a relief valve for the insurance industry. Along the way he skillfully weaves in historical points of interest specific to the industry’s development in Texas. Phil Ballinger of the Surplus Lines Stamping Office of Texas (SLSOT) fills us in on what’s going on financially with surplus lines companies in the state, including what premiums are doing and which lines are increasing market share. He also explains SLSOT’s role in helping to ensure the viability of the carriers operating in Texas.

Joe Mangan, CPCU, a regular contributor to Insurance Journal, discusses not only the strategic importance of E&S carriers but how differences in the way states regulate standard and non-standard insurers affect the way surplus lines companies fulfill their responsibilities. Burns & Wilcox’s David Price and William McCord offer guidelines for retail agents on how they can successfully take advantage of surplus lines wholesalers for their clients’ benefit.

One of our legal specialists, Brian Martin, an attorney with Thompson, Coe, Cousins & Irons, L.L.P., takes a look at some of the thorny legal questions raised by surplus lines policies. And Gil Hine, president of McClelland & Hine Inc. and president of the Texas Surplus Lines Association (TSLA), rounds out the issue in our “Parting Shots” column, with his thoughts on the role played by the TSLA in contributing to the health and stability of the surplus lines industry. Hine offers his insight on the importance of developing relationships with experienced, professional wholesalers who have the expertise and ability to forge innovative solutions to complex problems.

Finally, to all of our contributors: Thank you very much for being so generous with your thoughts and expertise. We’re all better for it!