Surplus lines premium exceeded $24 billion and premium bearing transactions exceeded 2.6 million through the first six months of 2021, according to the 2021 Midyear Report of the U.S. Surplus Lines Service and Stamping Offices by the Wholesale & Specialty Insurance Association (WSIA). Premium increased 21.9% and transactions increased 7.2% over numbers reported through the same period in 2020.
Each of the 15 stamping offices reported premium increases through midyear 2021 and all but one state reported increases in transactions. Stamping office reporting is an indicator of the direction of the U.S. surplus lines market since states with stamping offices accounted for 62.7% of U.S. premium volume in 2019, according to stamping office and AM Best reports. State stamping and service offices are non-governmental entities that help facilitate compliance with surplus lines insurance regulations and tax filings as well as additional services for their respective memberships.
The 2021 Midyear Report revealed that in contrast to the midyear 2020 and annual 2020 reports, transaction counts increased for the first time since the 2019 report.
Idaho reported the highest increase with 13,257 transactions, up 27% from 2020. “Premium growth can be seen in general liability, fire & allied, and general contractors,” according to Wendy Tippetts, manager of the Surplus Line Association of Idaho. Transactions are up significantly in high limit accident & health, she said. “General liability and fire & allied increases are not surprising due to the magnitude of residential and commercial construction.”
Other western states also showed growth in the surplus lines market. According to Scott Wede, executive director of the Surplus Line Association of Arizona, overall double-digit rate increase came from all lines of business. “Commercial and residential construction class premiums have increased along with professional classes,” he said. “Arizona and some neighboring states are in a building boom and the addition of new households reflects increases in all classes.”
In other states it was casualty coverages driving the growth in surplus lines premium volume.
“In Illinois, our property categories have retreated somewhat from their strong gains in 2020,” said Surplus Line Association of Illinois CEO David Ocasek. “However, we are seeing significant growth in the first half of 2021 for general liability, excess general liability, E&O/D&O, cyber, umbrella, commercial auto physical damage and pollution.” Strong performance in these categories has contributed to surges in both total premium (15.2%) and number of documents filed (8.7%), as well as a 6% increase in average premium per filed document, according to Ocasek.
New York experienced the lowest premium growth of any stamping office state in 2020 but has rebounded significantly in the first half of 2021. “Year over year, as of June 30, the New York excess line market enjoyed substantial premium growth of 18%,” said Dan Maher, executive director of the Excess Line Association of New York. “The increase of nearly $470 million is nearly triple the increase from 2019 to 2020 at midyear. I attribute the difference to the pandemic’s negative impact in 2020.”
North Carolina reported the second highest premium growth of the stamping office states. Geoff Allen, chief operating officer of the North Carolina Surplus Lines Association, said that North Carolina realized an increase of 34% in premium for the first half of 2021. “The month of June and the second quarter of 2021 were both records for surplus lines premium filed in North Carolina. Most of the increases were in commercial property, general liability, excess liability, directors and officers and cyber liability. In addition, the total number of filings were up 8% in 2021 over the same period in 2020.”
Since 2018, surplus lines premium growth reported by the stamping offices in quarters three and four has exceeded premium growth in quarters one and two, and many market leaders see continued opportunity for expansion in the second half of 2021.
The report’s statistics are gathered and reported individually by each state stamping office and the data is aggregated and summarized by WSIA on their behalf.
Source: Wholesale & Specialty Insurance Association (WSIA)
Topics Trends Carriers Liability Excess Surplus Pricing Trends
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