What’s happening in the surplus lines insurance market?

The US Surplus Lines Service and Stamping Offices have disclosed in their 2023 annual report that surplus lines premium reached $72.7 billion, with 5.8 million reported items filed throughout the year.

This represents a 14.6% increase in premiums and a 5.2% increase in filed items compared to 2022, following a record-breaking $63 billion premium and 24.1% growth in the previous year.

Commercial liability and commercial property coverage dominate the excess & surplus (E&S) market, while personal lines like homeowners’ and disability policies, despite seeing an increase in some states, remain a smaller fraction of the market. Notably, both lines experienced a decrease in filed items from 2022 to 2023.

Ben McKay, CEO and executive director of the Surplus Line Association of California, observed modest growth in California’s market in 2023, with a near 3% increase in premiums and just under a 5% rise in transactions.

“Nobody who has seen the volatility in the California homeowners’ market will be surprised to hear that homeowners’ was the one line of coverage that saw large increases in both premium (20%) and transactions (26%) in 2023,” McKay said. “This was to be expected, given the decisions by numerous admitted carriers to stop writing new homeowners’ business in California.”

In Illinois, premium growth moderated to 9.6%, a stark contrast to the prior year’s 23% surge. David Ocasek, CEO of the Surplus Line Association of Illinois, remarked on the market’s capacity to meet surging insurance demands, noting significant increases in auto liability and property segment premiums.

Florida continued to witness premium growth, reporting a 27.8% increase, as noted by Mark Shealy, executive director of the Florida Surplus Lines Service Office. The commercial property market, in particular, saw premiums soar due to market conditions and a decrease in policy counts.

Oregon’s surplus lines premiums grew by more than 18% in 2023, surpassing $1 billion, with liability and property lines experiencing significant growth, according to Roger Helbling, executive director of the Surplus Lines Association of Oregon.

Janet Pane, executive director at the Excess Line Association of New York, reported moderate growth in New York’s E&S market, with transaction volume up by 8.6% and premium growth by 5.2%. Key drivers of premium increases included primary general liability, property, excess liability, and umbrella policies.

“These transformations create a protection gap for consumers, presenting the insurance industry with an opportunity for reinvention, with the E&S market at the forefront of innovation,” Pane said.

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