E&S insurance midyear premiums reflect market uncertainty
Surplus lines growth continued during the early days of the global pandemic, but the number of filings shrunk in several states.
Midyear surplus lines premium assessments reported by the 15 stamping and service offices in the United States illustrated the strong momentum the excess and surplus lines market had as 2020 began as well as the creeping impact of the COVID-19 pandemic as the year unfolded.
For the first six months of 2020, stamping offices reported nearly $20 billion in premium, which is 10.3% higher than the first six months of 2019. However, the number of filings was slightly down year-over-year.
States with stamping offices accounted for 62.7% of U.S. premium volume counted in 2018, according to the Wholesale & Specialty Insurance Association (WSIA) and AM Best. To that end, stamping office premium reports are “indicative of the direction of the surplus lines market each year,” says WSIA Executive Director Brady Kelley.
The graphic above was prepared by WSIA to illustrate the midyear premium results from each of the 15 stamping offices. The illustration below from the September 2020 issue of NU Property & Casualty magazine highlights the mixed results apparent in the midyear premium data.
Speaking on June 18, 2020, during the WSIA webinar, “Perspectives from Stamping Office Leaders,” several stamping office representatives said the month-by-month premium reporting tells the story of financial uncertainty ushered in with the coronavirus as well as pockets of market hardening as a result of the mainstream financial distress unleashed by the pandemic.
“This year, in March, when the ‘shelter-in-place’ hit, I was calling around to lots of brokers and receiving a lot of positive news,” said Ben McKay, CEO and executive director of the Surplus Line Association of California. “Brokers were telling me they were up… Then, as we moved through the year and got to May, all of a sudden, we had a really down month.”
Premium growth in Texas, however, told a different story.
“We’re up, every month” of 2020, said Greg Brandon, executive director of the Surplus Lines Stamping Office of Texas. “Every month this year has been the highest recorded month of premium for that month.”
Premium growth was hot in Florida at the start of 2020. “Then we started to see the growth of the premium went down a little bit, and filings went down a lot,” said Bryan Young, assistant director of the Agent Services Florida Surplus Lines Service Office.
Dan Maher, with the New York stamping office, said the trend would appear to be that COVID-19’s impact on the overall excess and surplus lines market is creeping in as 2020 progresses, but that strong market momentum, in general, may prevent an overall hardening. “Year-over-year doesn’t show a drastic picture. But if you look at the months of April and May, the story is a little different,” said Maher, who is executive director of the Excess Line Association of New York.
David Ocasek agreed.
“We came out of the gate this year really going gangbusters,” said Ocasek, CEO of the Surplus Line Association of Illinois. “In May, we kind of put on the brakes a little bit. I attribute that to the pandemic effects starting to kick in.”