Midyear surplus lines premiums trending to exceed 2020 activity
The 15 U.S. stamping offices reported more than $24 billion in surplus lines premiums for the first half of 2021.
The surplus lines market rebounded in the first six months of 2021 following 2020′s pandemic year, with notable growth in both premiums and transactions, a new report reveals.
According to the recently released 2021 Surplus Lines Stamping Office Midyear Report from the Wholesale and Specialty Insurance Association (WSIA), surplus lines premiums exceeded $24 billion, and premium bearing transactions surpassed 2.6 million in the first half of 2021, outpacing 2020′s activity for the same period by 21.9% and 7.2%, respectively.
The report aggregates data from the 15 nationwide state stamping offices, which non-governmental entities responsible for facilitating compliance with surplus lines insurance regulations and tax filings and providing additional services for their memberships. In 2019, states with stamping offices accounted for 62.7% of U.S. surplus premium volume, highlighting the key role the offices play in indicating the conditions of the surplus lines market.
Midyear 2021 surplus lines activity
All offices reported premium increases through midyear 2021, with only Texas reporting a decrease (-0.02%) in transactions. And for the first time since 2019, the 2021 report indicates an increase in transaction counts after a slump last year.
Oregon reported the greatest premium increase of $343.09 million — a 36.40% increase year-over-year, while Idaho reported the highest increase in transactions (13,257), up 27% from 2020.
Wendy Tippetts, manager of the Surplus Line Association of Idaho, said in the report: “Premium growth can be seen in general liability, fire & allied, and general contractors. Transactions are up significantly in high limit accident & health. General liability and fire & allied increases are not surprising due to the magnitude of residential and commercial construction. With the influx of people relocating to our beautiful state, new home construction is booming statewide, and property values are following suit.”
Other western states experienced growth tied to the bounceback in construction following months of delayed projects during the coronavirus pandemic last year.
Premium growth is also being attributed to insurance lines such as E&O, D&O, cyber, umbrella, commercial auto and pollution, such as in Illinois, which saw strong performance in these lines as well as general liability and excess general liability. Surplus Line Association of Illinois CEO David Ocasek said those categories “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” in his state.
New York, which saw the lowest premium growth of any stamping office state in 2020, rebounded significantly in the first half of 2021. Dan Maher, executive director of the Excess Line Association of New York, said: ”Year-over-year as of June 30, the New York excess line market enjoyed substantial premium growth of 18%. 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.”
As the year progresses, WSIA asserts that there is continued opportunity for surplus lines expansion in the second half of 2021, especially when considering surplus lines premium growth reported by the stamping offices in quarters three and four have exceeded growth in quarters one and two since 2018.
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