Surplus lines premium reached nearly $36 billion through the first six months of 2023, according to the 2023 Midyear Report of the US Surplus Lines Service and Stamping Offices.
The premium increased about 16% in total compared to the results reported for the same period in 2022, while the number of transactions carrying the premium increased 2.6% to almost 2.9 million. The latest results follow last year’s record-breaking midyear premium of $31 billion and growth of 32.4%.
Florida ($8.65 billion), California ($7.83 billion) and Texas ($7.21 billion) accounted for the highest premium amounts.
“The massive growth we saw across the country after the pandemic may be behind us, but the report shows that the E&S market continues on a strong trajectory and is there to meet the needs of Americans looking for unique insurance solutions,” said David. Ocasek, CEO of the Surplus Line Association of Illinois.
The mid-year report is intended to be a granular tool to analyze and identify market trends by aggregate product line and provide useful information to better serve clients. The accompanying line of business data included provides an important indication of the business types driving the E&S market.
The Wholesale & Specialty Insurance Association (WSIA) reports that commercial liability and commercial property coverage make up the majority of the market. While some states have seen an increase in personal lines of coverage such as homeowners and disability policies, those lines continue to make up only a small portion of the overall E&S market.
Florida Premium Volumes Surge
Mark Shealy, chief financial officer of the Florida Surplus Lines Service Office, noted that Florida continues to see a surge in premium volumes – with an increase of 34.7%, while transaction numbers show the constant movement of a single figure.
“We do not expect any change in these results in the near term,” Shealy said. “Much of this shift is driven by the commercial property market, which continues to experience price tightening and policy rate reductions. The turnaround is also supported, to a lesser extent, by the tightening of commercial general liability.
He also mentioned a sluggish cyber market, adding that the “cyber line seems to have softened to the point that premium increases are now outpacing the growth in the number of policies.”
Growth in California is slowing
While California has seen record growth in recent years – 77% from 2019 to 2022 – the first half of 2023 shows signs that some lines are experiencing slow growth and a decline in total -the state premium from the first half of 2022.
“General liability decreased 8% from last year and comprised 25% of policies while cyber, commercial variation in conditions, and many homeowners accounted for nearly 50% of total premiums, ” said Ben McKay, chief executive officer and executive director of the Surplus Line Association of California. “Our experience in the first half of 2023 may indicate a softening of some liability coverages, or we may see a short-term aberration. The property lines in California are clear which continues to experience a difficult market.
Moderating Growth in Illinois
Illinois sees premium growth moderate to 10.6% after year-over-year growth of 23% through 2022.
“Property coverage continues to be a very strong driver of premium growth in Illinois,” Ocasek said. “The umbrella/excess liability and commercial auto liability category also saw strong growth. However, after spiking in 2022, cyber liability moderated in the first half of this year with a 15% reduced premium.
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California Florida Bucks Illinois’ Excess Surplus Price Trend
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