According to a new report from AM Best, total direct written premiums (DPW) from US excess lines hit a record high of $82.6 billion in 2021, with momentum continuing through mid-2022 .
In the first six months of 2022, premiums topped $31 billion and premium-bearing transactions pushed $2.8 million. Premiums in the E&S sector increased by 32.4% and transactions increased by 9.4% compared to the number reported during the same period in 2021, according to the 2022 mid-year report from the US Surplus Lines Service and Stamping Offices published in July.
Best’s market segment report, “Record-High Direct Premiums Written for the US Surplus Lines Segment in 2021”, indicates that US surplus lines companies reported improved underwriting results and operating and recorded their strongest year-over-year premium growth. since 2003.
In 2021, the surplus lines market grew by nearly 25%, including US domestic surplus line insurers, Lloyd’s (90) syndicates that underwrite US surplus lines business, and non-Lloyd’s regulated foreign insurers, David Blades, managing partner at AM Best, told the Journal of Insurance.
“Total direct written premiums from 2021 excess lines that we aggregated were $82.653 billion, compared to $66.102 billion in 2020,” Blades said. The main drivers of this growth were companies identified in the report as “domestic professional” excess line issuers, or insurers that underwrite more than 50% of their total DPW on a non-admitted or excess lines basis.
“Domestic professionals wrote $61.2 billion in 2021, up from $46.9 billion, an increase of 30%,” Blades said.
In terms of admitted lines versus non-admitted or excess lines, the excess lines market represented 10.1% of the total U.S. P&C insurance market (in DPW terms), in 2021, the highest percentage high to date, Blades added.
The market share of excess line insurers in total DPW P/Cs has more than doubled over the past 20 years, reaching 10.1% at the end of 2021, from 4.3% in 2001. excess lines in commercial lines The DPW increased to 20.4% at the end of 2021, compared to 8.3% at the end of 2001.
The report notes that between the first quarter of 2020 and mid-2022, U.S. P&C insurers and their distribution partners faced a myriad of challenges, including the widespread effects of a pandemic, a supply chain and rising inflation, while sustaining above-average losses from natural disasters and significant investment market volatility. As a result, loss costs continue to rise and pricing adequacy remains a major concern for several hedging lines.
Despite these challenges, the P&C industry was able to limit underwriting losses and generate growth in surpluses. AM Best expects surplus insurers to continue to benefit from underwriting results, organic capital generation and smart balance sheet factor management, as they have throughout the pandemic. However, volatility in the investment markets could limit overall operating profit.
Excess surplus in the United States
Interested in excess surplus?
Receive automatic alerts for this topic.