Excess and surplus lines premium recorded by the 15 U.S. surplus lines stamping and service offices exceeded $41.7 billion in 2020, a 14.93 percent increase over the nearly $36.3 billion reported for 2019. Texas held its position as the second largest E&S premium state, a position it was losing to Florida at midyear. Eleven states, including Texas, had double digit percentage increases over their 2019 reported premium.
As the second highest state in E&S writings, Texas was behind only California; Florida remains a close third. New York had the fourth highest premium among states whose E&S writings are reported through stamping or service offices. The four top surplus lines states wrote just less than 76 percent of such reported E&S premium.
The only shift in state ranking of E&S premium volume occurred among the lowest volume writers among the 15 states. Utah and Nevada traded places. In 2020, Utah moved into 13th place and Nevada into 14th for surplus lines premium volume. Utah was pushed by a 37.07 percent increase in E&S premium, while Nevada’s 6.55 percent growth was below the average for the 15 states. Utah also had the greatest increase in item count among the 15 states with stamping or service offices.
Surplus lines writings in Texas made up about 19.00 percent of all premium reported through service offices in 2020. Texas surplus lines premium was 25.00 percent of the premium reported by the top four states.
In a media release, WSIA noted that the premium increase came despite a 1.3 percent decrease in the count of items processed by the 15 states. All of these states experienced increased E&S premium; however, six states had decreases in their total filings count. Illinois’s item count was down 7.20 percent, the most among the 15 reporting states. Utah reported the largest percentage increase in items processed, 25.54 percent increase.
WSIA said the surplus lines industry showed resilience through the trials and tribulations of 2020 and premiums and items continued the trends from midyear. “The report certainly points to a hardening market based on both premium growth and increasing premiums per transaction,” said Dan Maher, executive director of the Excess Line Association of New York (ELANY). “However,” Maher continued, “the overall reduction in transactions suggests the industry is battling some headwinds due to economic conditions resulting from COVID-19.”
Greg Brandon, executive director of the Surplus Lines Stamping Office of Texas (SLTX), noted that Texas surplus lines premium had the same trend lines that the nation had in 2020. Brandon attributed the increased premium but lower item count to discipline among both underwriters and customers.
According to WSIA, stamping office reporting provides a valuable indicator of the direction of the U.S. surplus lines market, as the reporting states account for about 62 percent of all U.S. surplus lines premium.
California reported the largest premium amount in 2020, more than $11.15 billion. SLTX recorded the next highest premium amount at $7.92 billion, followed by the Florida Surplus Lines Service Office (FSLSO) with $7.56 billion, and ELANY with $5.05 billion.
Among these top four states, California reported the highest percentage of premium growth, at 22.68 percent over 2019’s recorded premium. Despite their significantly smaller premium volume, three other states’ growth rate exceeded California’s. Along with Utah with its 37.07 percent E&S premium growth, Idaho’s reported premium increased by 35.83 percent and Washington’s by 24.05 percent.
Sylvia Bruno, executive manager of the Surplus Line Association of Utah said, “We set records with both premium and item counts in 2020, driven primarily by large increases in general liability, along with fire and allied lines. We also had a significant increase in difference-in-conditions commercial risks and earthquake insurance.”
On the other side of the country, Geoff Allen, COO of the North Carolina Surplus Lines Association noted several high growth lines in his state. “North Carolina had over a 20 percent increase in premium for commercial property, excess and umbrella, directors and officers, cyber and excess auto,” Allen said. Overall, growth in North Carolina was 8.66 percent.
In a Jan. 26 media release, SLTX noted growth in contingency liability, flood and fire and allied lines.
Stamping offices each reported item counts that included new and renewal business, plus endorsements that included audit premium. While item counts were down 1.27 percent relative to 2019, the item count was down less than it was at midyear when it was down 2.59 percent.
Florida recorded the largest number of filings for the year, at 1.54 million, which was a 6.87 percent decrease from last year’s reported item count. Texas had the second highest total item count with 1.06 million. California experienced a 7.95 percent increase in items, with a total 2020 item count of 0.77 million.
Gary Pullen, FSLSO executive director, explained Florida’s lower item count as “due to significant decreases in personal liability, HO-3 and inland marine/personal policy counts.” Florida did report increases in policy counts for commercial property, residential flood, dwelling property and excess commercial general liability, according to the WSIA media release.
Effective Feb. 1, 2020, the FSLSO reduced its stamping fee rate from 0.10 percent to 0.06 percent. The tax rate in Florida decreased from 5.0 percent to 4.94 percent for policies effective on or after July 1, 2020, if written through surplus lines agents. Independently procured coverage policies continued to be taxed at 5.0 percent. The stamping fee in Texas changed from 0.15 percent to 0.075 percent for items with inception date on or after Jan. 1, 2021.
The statistics were gathered and reported by each state stamping office, and the data is aggregated and summarized by WSIA on their behalf.