US Surplus Lines DWP Up 11.2% in 2018
The national excess and surplus lines (E&S) market recorded $49.89 billion in direct written premiums in 2018, an 11.2% growth over 2017, according to a report by A.M. Best Co. This increase surpasses the 5.8% growth recorded in 2017 over 2016.
An article by Insurance Journal attributes the growth to a strong economy, changing technology, and weather catastrophes and wildfires. Additionally, an increasing amount of business is migrating from the retail channel to the wholesale channel. Tim Turner, chairman and CEO of R-T Specialty, said that new business is coming into the E&S sector from standard lines that are not renewing accounts.
“In the first quarter this year we started to see things change – non-admitted commercial lines business going into the E&S sector increased from 10% of market to 11%-12% by the start of the second quarter, and then up to 13% by the end of the second quarter,” Turner said.
The A.M. Best report states that the market is stable, though weather-related losses and competition led to an underwriting loss for surplus lines insurers for the fourth consecutive year. Nevertheless, industry executives agree that there are opportunities for businesses in the current E&S market.
“These are great times for wholesaling and for the E&S market,” Turner said. “We’re under a lot of pressure as an industry to respond effectively and to execute on behalf of retail agents and markets. That’s a great opportunity for us in this sector of the industry to perform at a high level.”
In Texas, $6.08 billion in E&S premium was reported to SLTX in 2018. This total represented an 11.4% growth, which is similar to the national growth reported by A.M. Best Co. As of August 31, 2019, SLTX has recorded $4.85 billion in E&S premium for the year, a 15.9% increase over the same time period in 2018. This may suggest that the market’s upward trend of growth may continue through the fourth quarter and end of 2019.