Surplus lines reach record premiums and transactions in 2021
U.S. excess lines hit new records in terms of premium levels and transactions over the past year, according to the Wholesale and Specialty Insurance Association (WSIA). Data from US stamp offices showed premiums rose 22% to $51 billion. Jtransactions totaled 5.3 million, a year-over-year increase of nearly 7%.
“The data is quite telling and confirms what many industry leaders have been saying over the past two years,” said Dan Maher, executive director of the Excess Line Association of New York, said in a statement. “Premiums on renewals have increased significantly and, at the same time, the admitted market has shrunk in several areas, resulting in a shift of activity towards the E&S market. The change affects many lines of business, from property with CAT loss exposures to liability risks such as surplus, umbrella, D&O and cyber where social inflation and new exposures are serious concerns.
Maher has added new capacity in the E&S market, which should moderate and stabilize prices as it rolls out throughout the year.
Double-digit premium growth seen nationwide
Every state reported double-digit premium increases, with Illinois recording the largest gain at more than 40% according to the WSIA.
“Our numbers were incredibly strong, especially in the third and fourth quarters,” said David Ocasek, CEO of Illinois Surplus Lines Association, said in a statement. “General and Excess Liability categories, including Commercial General Liability, Cyber, Pollution, Product and Employment Practices, led the way with a 60% increase over the prior year. Real estate, including all risks, increased by 23%.
Other states with premium growth above 25% were Arizona (37.7%), Florida (25.92%), Nevada (25.69%), New York (25.83%) , North Carolina (34.7%) and Oregon (26.93%), according to the data. American stamping offices.
“We have seen premium increases greater than 100% on business categories such as cyber liability, excess personal liability and miscellaneous liability,” said Geoff Allen, chief operating officer of North Carolina Surplus Lines Association, said in a statement. “The largest increase in transactions filed for any business category in 2021 was primary residential flood insurance.”
In the nation’s largest excess line market, California, premiums rose 18% while transactions rose 7%, according to the WSIA.
David Kodama, Executive Vice President of The Surplus Lines Association of Californianoted significant increases in item count and average premium across all coverage types, with cyber, property and commercial auto standing out.
“This growth coincides with reported increased activity in data breaches, ransomware attacks, wildfires, increased severity of automotive losses, and the emergence of social and cost inflation,” said Kodama in a statement.
Although they did not keep up with premium growth, transaction increases above the totals seen in 2020 were recorded in every state, the WSIA reported.