A look at WSIA after two years
Without the wholesale, specialty and surplus lines industry, new businesses would be uninsured.
The Wholesale & Specialty Insurance Association (WSIA), formed in August 2017 with the merger of the American Association of Managing General Agents (AAMGA) and the National Association of Professional Surplus Lines Offices (NAPSLO), is an organization of insurance professionals dedicated to the wholesale distribution system. Two years later, WSIA’s membership is composed of approximately 740 firms, more than 1,700 offices and tens of thousands of industry professionals, and our members represent the entirety of the wholesale, specialty and surplus lines industry.
The wholesale, specialty and surplus lines industry acts as an effective supplement to the admitted market in situations in which admitted carriers are either unable to provide coverage or don’t have the appetite to underwrite the risk. WSIA supports the industry’s role as the “safety valve” for the most unique, hard-to-place, specialized risks and the industry’s importance in the overall insurance marketplace. Without it, new technologies, economic development, new business ventures, and consumers exposed to unique risks in various regions and on the coasts of our country, among many others, would be uninsured.
WSIA promotes its members’ vital role in the global economy by providing access to networking meetings, education opportunities, talent recruitment and development initiatives, regulatory and legislative advocacy, and creating awareness of the value of wholesale distribution. The association also monitors the health and strength of the wholesale, specialty and surplus lines market segment. AM Best’s 2018 Special Report, U.S. Surplus Lines — Segment Review, which is supported by a grant from the WSIA Education Foundation, found that the surplus lines industry reached a historic $44.9 billion in direct written premium in 2017, representing a 5.8% increase over the prior year. Most importantly, AM Best’s report highlights the segment’s financial strength, operating performance and resilience over time. For the 14th year in a row, the surplus lines industry reported no financially impaired companies in contrast to the admitted property & casualty industry’s 230 known impairments in the same time period. Surplus lines insurers continue to maintain a higher proportion of secure ratings than the overall property & casualty industry. Through midyear 2018, 100% of surplus lines companies maintained secure AM Best ratings.
We anticipate continued growth in AM Best’s 2019 report to be released this month. The 15 states with stamping offices reported $31.4 billion in surplus lines premium in 2018, an 11.3% increase over the prior year. These 15 states reported another increase of 12.7% when comparing surplus lines premium for the first six months of 2019 to 2018, further highlighting the anticipated growth. A strong economy and increasing demand for solutions to complex risks and new product innovation are key drivers of that growth.
We believe the market’s stability and growth are enhanced by the efficiencies and cost-effectiveness of the wholesale distribution system. Wholesale distribution delivers tremendous value to retail agents and their insureds. WSIA member wholesale brokers are technical experts who specialize in creating innovative solutions for the most complex risks. They have access to markets and options that don’t exist in the standard market, and they help agents and their clients find the right coverage option for the insured in the right market. Wholesalers are nimble and adept at reacting quickly to emerging risks and market changes.
The 2019 WSIA Annual Marketplace is September 22-25 in San Diego, Calif.
Brady R. Kelley (brady@wsia.org) is the executive director of WSIA, based in Kansas City, Mo.
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