U.S. Surplus Lines Premium Up 22% in 2021

Surplus lines premium increased 22% and transactions rebounded almost 6.6% over their 2020 totals in the 15 states with designated surplus lines’ stamping offices.

The increases represented record levels of premium ($51 billion) and transactions (5.3 million) since the stamping offices began reporting aggregated data on an annual and semi-annual basis. Each state reported double-digit premium increases with Illinois leading the way at over 40%.

David Ocasek, CEO of the Surplus Line Association of Illinois said, “Our numbers were incredibly strong, especially in the 3rd and 4th quarters. General and excess liability categories, including commercial general liability, cyber, pollution, products, and employment practices liability, led the way with a 60% increase versus prior year. Property, including all risk, increased 23%.”

North Carolina recorded the third highest premium increases of the stamping office states at almost 35%. “We saw greater than 100% increases in premium on classes of business such as cyber liability, excess personal liability and miscellaneous liability,” said Geoff Allen, Chief Operating Officer of the North Carolina Surplus Lines Association. “The largest increase in the number of transactions filed for a class of business in 2021 was primary residential flood insurance.”

California, the country’s largest surplus lines insurance market, reported premium increases of 18% along with a 7% increase in transactions. David Kodama, executive vice president of the California SLA, said, “The SLA recorded significant increases in item count and average premium for various coverages, including cyber, property and commercial auto. This growth coincides with reported increased activity in data breaches, ransomware attacks, wildfires, increased auto loss severity and emerging social and cost inflation.”

Even though transactions haven’t kept pace with premium, each state increased their total transactions over 2020, with the exception of Texas.

Western states such as Idaho and Utah led the way with transaction increases of 23% and 13% respectively, likely due to their substantial increases in population growth. In all, the stamping office data indicates that the surplus lines industry continues to thrive as the economy recovers and inflation continues upward.

“The data is quite telling and confirms what many industry leaders have been saying for the last two years,” said Dan Maher, executive director of the Excess Line Association of New York. “Premiums on renewals have increased substantially and at the same time the admitted market has retrenched in several areas, which is causing business to shift to the E&S market. The shift is across numerous lines of business, from property with CAT loss exposures to liability risks, such as excess, umbrella, D&O and cyber, where social inflation and new exposures are of serious concern. I see a lot of new capacity in the E&S market, which should moderate or stabilize pricing … in 2022.”

Stamping office states accounted for 63% of the total U.S. surplus lines premium in 2020. These statistics are reported individually by each state stamping office and the data is aggregated and summarized by the Wholesale & Specialty Insurance Association.