Less than a generation ago, the ups and downs of an insurance cycle were simply part of the roller coaster ride of doing business. The E&S industry took the changes for granted, or at the very least expected them to occur. Agents and brokers knew that a soft market of four to five years would be followed by a hard market for a short time, which in turn would be followed by a soft market. The down times were sometimes bumpy, but at least they were predictable. Today, the E&S market appears trapped in a different sort of cycle — a soft market followed by a softer market.

The trending for Florida's E&S premiums written has been a fairly consistent drop-off for the past several years. Reports from the Florida Surplus Lines Service Office (FSLSO) through September 2010 show both premiums and transactions down again from 2009. Agent data for taxable premiums through the third quarter of 2010 shows premium of $2.597 billion compared to $2.835 billion for the same period in 2009. That is a reduction of close to $240 million, or almost 10 percent. Policy count reflects a similar fall off: 493,624 in 2010 compared to 544,841 in 2009.

There is little to indicate a sudden upward swing in E&S market production or premium soon, at least for any of the major lines of business. The economy is still struggling and new business start-ups are rare. Many of the businesses that have managed to survive have cut payroll because of reduced revenue; smaller payrolls mean reduced insurance costs, and less revenue for the agent/broker.