U.S. excess lines market posted “record” direct written premiums in 2021

“Despite these challenges, the P/C industry was able to limit underwriting losses and generate excess growth,” the report said. “In particular, non-admitted or excess line companies were able to generate net underwriting and operating gains.”

AM Best observed that excess line insurers have been “particularly critical to the market” as they provide solutions for single exposures with higher risk profiles. And in this post-pandemic phase, these insurers “have been even more important” thanks to technological advances, the rating agency added.

The consolidation of specialty insurance market distributors – which include wholesale insurance brokers and managing general agents (MGAs) – continues to reshape the insurance market, AM Best said in its report. Mergers and acquisitions have helped new entities offer a wider range of products and services, allowing them to better position themselves to handle the transformation of retail agent buying trends, it was noted. The acquisition of small brokers and intermediaries has also helped to expand the activities of large wholesale brokers.

“AM Best believes that competitive market conditions will continue to drive strategic acquisitions of specialty niche insurers and insurers with established market presence or advanced technology capabilities,” the report said.

Other key points from the report include:

  • Overall, excess lines insurers reported significant improvement in underwriting and operating results in 2021.
  • Surplus line coverage solutions have become more and more in demand, especially to cover higher and evolving risks such as cyber liability, specific professional liability classes, energy and environmental liability, as well as real estate risks in areas vulnerable to forest fires.
  • The inadequacy of the write-downs of surplus lines – there has only been one since the beginning of 2004 – further underlines the resilience of surplus lines and companies in the specialized markets.

“Overall, AM Best expects surplus insurers to continue to benefit from underwriting results, organic capital generation and smart management of balance sheet factors, as they have done throughout. of the pandemic,” the report concludes.

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