Looking Back at the Rise of NAPSLO

NAPSLO, or the National Association of Professional Surplus Lines Offices, Limited, was organized during the years of 1973, 1974 and 1975. The first meetings were usually held at the same time as the meetings of the National Association of Independent Insurers.

Prior to the formation of NAPSLO, the principal association was the American Association of Managing General Agents (AAMGA), which had been operating successfully for a number of years. However, it had a rule that each member must have a managing general agency contract with at least three insurance companies; thus, many surplus lines licensees could not qualify for AAMGA.

They needed an association to foster their aims and needs. The NAPSLO association accepted the licensees who had a surplus lines license and were operating as wholesalers.

From these modest beginnings, NAPSLO now has a very large membership with members in every state. The number of attendants at recent annual member meetings has been in excess of 2,000. Virtually every company writing surplus lines types of coverage maintains associate memberships.

NAPSLO, which maintains headquarters in Kansas City, Mo., has grown because of the needs of the surplus lines industry, which has experienced phenomenal growth. For example, in California, only a few years ago the surplus lines volume was $10,000,000 annually. Recently, the annual volume has been $1,600,000,000.

The reason for this rapid growth in volume arises from the following: flexibility of underwriting, and the operation on a non-admitted basis so that the rates and forms do not have to be filed and approved, which is time-consuming. Also the domestic companies who are writing surplus lines business have supplanted the old Lloyd’s of London to a considerable extent.

It is interesting to note that most of the largest surplus lines companies are owned by the old-line standard companies. For example, AIG owns Lexington, the Hartford owns First State, the Nationwide Group owns Scottsdale, etc.

Keep in mind that the logo of NAPSLO is Uberima Fides. That translated from Latin means “utmost good faith.” For the past quarter of a century, the surplus lines offices in general have had an admirable record in helping the insurance agents and brokers to place the hazardous, the unusual, and the difficult types of property and casualty insurance. The board of directors of NAPSLO is comprised of delegates from the surplus lines offices, from various regions of the country, and also from certain of the major surplus lines insurance companies writing business.

The association is also fortunate in that it has had an executive director, Richard M. Bouhan, for a number of years and this has been excellent for continuity of management and purpose.

The future looks exceedingly promising for the surplus lines industry. Among the reasons for this buoyant future are the following: surplus lines brokers can usually give quick quotations; they frequently have the pen of certain companies. Since the business is usually placed in approved non-admitted companies, there aren’t any rated filings or form filings.

It should be noted that the surplus lines companies are typically receptive to innovative and new forms of insurance. Among these forms which have been promoted in the surplus lines companies could be employment practices liability, directors and offices liability, professional liability, difference in conditions, and many others.

The NAPSLO organization has certainly grown over the past quarter of a century, and the surplus lines volume in the property/casualty insurance field has expanded over the same period. There have been so-called hard markets and soft markets, but NAPSLO has expanded each year in spite of the fluctuations in the marketplace.

Property and casualty insurance agents and brokers everywhere should write to the National Association of Professional Surplus Lines Offices and obtain the names of the members in their state. They will then find that they can probably write almost any situation that comes to them.

A. Mason Blodgett, who served on the first board of directors of NAPSLO, is the president of Cambridge General Agency with offices in San Francisco, Sacramento, Stockton, and Covina, Calif. They have been operating for approximately 50 years. During World War II, Blodgett was a Captain in the U.S. Air Force and he served as an Officer in the Property and Casualty Insurance Department of the U.S. Air Force. While working for certain insurance companies he was an underwriting manager and a claims manager. He is the author of the book, “Moral Hazard and Casualty Insurance.”