Surplus lines premium in Texas is up by 11.99 percent compared with the end of the third quarter last year. The major line of Other Liability is up 8.67 percent, but the second highest line by total premium, Fire (including Allied Lines), was up 22.78 percent. The premium increase in Fire (including Allied Lines) alone accounts for more than 61 percent of the total surplus lines increase year to date.
Other Liability’s premium increase did not keep pace with the overall increase, but the line still made up 42.45 percent of all writings through the third quarter. Premium for Fire (including Allied Lines) made up 35.28 percent of all surplus lines writings through the end of the third quarter, a full three percentage points higher than at the same time last year.
The strength of these major lines in the surplus lines market more than accounted for the 11 lines that were down year-to-date Sept. 30. Total surplus lines premium at the end of the third quarter was nearly $5.99 billion, exceeding total surplus lines writings for the entire years of 2016 and 2017, just shy of 2018’s total year writings of $6.08 billion and less than $1.0 billion off the total for 2019.
The third quarter slowed the pace of growth since the first quarter, which reported premium up 14.50 percent. Midyear results were up 13.41 percent.
SLTX reported that, except for July, each month’s recorded premium year-to-date was the highest ever recorded for that particular month. In 2019, July ranked as the largest premium volume month, so the 2020 result could be attributed to the timing of filings. The largest single-month premium volume in 2020 was reported in May at $772.88 million and the lowest monthly total was in February with $502.93 million. Still February 2020’s total exceeded the February filings of any prior year.
Policy count at the end of the third quarter declined by 4.38 percent from the same period last year, but average premium per policy was up 17.12 percent. As of Sept. 30, the average premium per policy was $10,993.65; at this time last year, the average premium per policy was $9,386.78. The stamping office also reported a 4.0 percent decline in item count.
Multi-state premium rose by less than one percent with a 4.13 percent increase in multi-state policy count. Multi-state premium made up 4.65 percent of the taxable premium reported to the stamping office through Sept. 30, 2020. By the end of last year, multi-state premium stood at 5.07 percent of total premium.
The stamping office also reported a consistent inflow of policy filings for exempt commercial purchasers (ECPs); there were 1,874 policies for ECPs in the first three quarters of 2020, compared with 1,873 in 2019. The number of industrial insureds dropped slightly from this time last year, with 116 policies filed in 2019, but 100 so far this year for this category of insureds exempt from diligent search of the admitted market.
Within the Other Liability line, the coverages showing the greatest increases were Excess/Umbrella, up by $144.8 million, or 16.99 percent; GL-Premises Liability Commercial, up $29.99 million, or 3.71 percent; Professional D&O, up $14.23 million, or 64.50 percent, and GL-Pollution, up $8.80 million, or 6.51 percent. Major declines within the Other Liability line were in Oil and Gas Liability, down $27.97 million or 43.33 percent; Professional Other (Including E&O), down $20.55 million, or 7.25 percent; GL-Contractual, down $5.16 million, or 102.69 percent, and GL-Cyber Liability, down $4.04 million, or 4.48 percent. Smaller declines were reported in Employers Liability, GL-Liquor; GL-Terrorism, Special Events Liability, GL-OCP, and GL-Underground Storage. Despite so many subcategories of the Other Liability line showing decreases, overall the line was up $202.77 million.
One of the three subclassifications within Fire (including Allied Lines) was down, but by a small amount considering the major subclassification of Property-Fire/Allied Lines was up by $392.85 million, or 22.78 percent. Oil and Gas Property was down $0.90 million, or 3.86 percent, and Property-Fire was reported at zero premium.
Only three lines reported multimillion dollar and double digit percentage increases over the third quarter last year: Other Commercial Auto Liability, up $49.47 million, or 28.77 percent; Allied Lines, up $37.20 million, or 27.91 percent, and Aircraft (All Perils), up $2.91 million or 77.07 percent. Commercial Multiple Peril was up $5.13 million, or 2.07 percent; Credit was up $4.04 million, or 5.30 percent; Commercial Auto Physical Damage, was up $3.01 million, or 1.82 percent. Smaller increases were reported in Earthquake, Inland Marine, Burglary and Theft and Private Passenger Auto Physical Damage.
The largest premium decreases for the first three quarters of 2020 were reported in Surety, down $15.60 million, or 301.58 percent; Ocean Marine, down $14.70 million or 45.99 percent; Group Accident and Health, down $9.53 million, or 15.64 percent; Products Liability, down $5.13 million, or 21.07 percent; Fidelity, down $5.04 million, or 152.72 percent, and Homeowners Multiple Peril, down $4.58 million, or 2.55 percent. Three lines posted negative premium through the end of the third quarter: Surety, Fidelity, and Other Private Passenger Auto Liability.
Notably, the lines posting the decreases made up 5.78 percent of premium recorded through the end of the third quarter. These same lines made up 7.50 percent of surplus lines premium at the end of 2019.
By the end of the third quarter, SLTX collected $8.99 million in stamping fees, a 12.1 percent increase over last year at this time. Online filings were down slightly, to 97.7 percent for the year, compared with last year’s 98.0 percent. There were 802,321 filings made with the stamping office through Sept. 30, down 4.0 percent from the 836,043 filings made through the third quarter last year.
More than half of all premium reported to the stamping office came from less than 10 percent of filers. In response to a public records request, as of Sept. 30, SLTX attributed $3.41 billion in premium to 72 brokers who are listed as voting or associate members of the Texas Surplus Lines Association on TSLA’s website. Together, these brokers reported 56.89 percent of all premium through the end of the third quarter this year. These 72 brokers made up 7.21 percent of the total number of filers, which was reported as 998 in the SLTX’s most recent annual report.