Surplus lines premium increased 10.3% in H1: WSIA

Total surplus lines premium reported to the 15 US stamping offices was $19.74bn for the first half of 2020, up 10.3 percent over the same period in 2019, figures from the Wholesale & Specialty Insurance Association (WSIA) have revealed.

The data adds to commentary from within the E&S sector from wholesale brokers and carriers highlighting the surge of business into the channel with hard pricing conditions as standard lines carriers have retrenched over the last 18 months.

WSIA said that each of the stamping offices reported premium increases for mid-year 2020, with eight states reporting double-digit percentage increases.

It noted the premium growth comes despite the ongoing pandemic, social distancing guidelines and resulting economic conditions.

The 15 stamping offices reported that transaction counts were down 60,181, or 2.6 percent, below midyear transactions in 2019. However, nine states reported increases in transaction counts.

States with stamping offices accounted for 62.7 percent of US premium volume in 2018 according to stamping office and AM Best reports. WSIA said this means stamping office reporting provides a good indicator of the direction of the surplus lines market overall.

Texas was one of six states with an increase in premium and drop in transactions. Greg Brandon, executive director of the Surplus Lines Stamping Office of Texas, noted that the second quarter of 2020 resulted in three of the top four highest premium months in the office’s history.

Illinois also reported increases in premium and decreases in transactions. Illinois stamping office executive director David Ocasek reported “solid” 12.2 percent growth in premium volume, but added: “We see an even stronger 22.4 percent growth in the premium per document filed, which doesn’t correlate exactly, but is an indicator of rates.”

Stamping office filings may serve as a lagging indicator in some states because filings are not due until several months after the business was placed. Several states have extended filing deadlines for surplus lines brokers in response to the pandemic.

WSIA noted that Florida has seen its numbers bounce back after a near 4 percent drop in premium activity in April and May. June was a record month in Florida surplus lines premium, increasing 32 percent over June 2019.

The statistics are gathered and reported individually by each state stamping office and the data is aggregated and summarised by WSIA on their behalf.