NY habitational sector driving E&S premium growth in region

NY habitational sector driving E&S premium growth in region | Insurance Business

NY habitational sector driving E&S premium growth in region

Mid-year premium growth reported by the 15 excess and surplus lines (E&S) stamping/service offices across the United States reached almost $18 billion, according to a recent summary compiled by The Surplus Lines Stamping Office of Texas (SLTX). That first half growth represents a 12.68% increase over the same period in 2018.

In the Northeast, the two stamping offices of New York and Pennsylvania reported premiums of $2.29 billion (a 1.22% increase) and $703 million (a 3.11% increase) respectively. In total, the Northeast contributed about $3 billion of premium growth in the first half of 2019.

According to the Excess Lines Association of New York (ELANY), the state has seen year-over-year record growth for the past six years. The association’s executive director, Dan Maher, explained that while all lines have grown, ELANY’s granular statistics show that construction liability risks are the single class that has driven the numbers most significantly.

He said: “That [construction liability class] may be flattening out this year. However, with the constraints being established at Lloyd’s and the movement away from under-priced business by [certain carriers], we should see more business and better priced business in the second half of the year to continue market growth.”

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Another sector really driving E&S premium growth in the Northeastern region is habitational risk.

Jim Epting, senior vice president, managing director, Burns & Wilcox, told Insurance Business: “The E&S market in the Northeast is hardening, especially in the habitational sector. Subsequently, carriers have become more conservative in their underwriting, both for new and renewal business. Some carriers, for example, are now instituting minimum premiums-per-door for habitational risks.”

Epting described the tightening and capacity of the commercial property market as the biggest challenge in the Northeast E&S insurance market. He told Insurance Business these challenges are primarily as a result of the impact from catastrophic events through which insurers have suffered significant property losses, leading to them limiting their underwriting appetites and increasing rates.

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However, as Maher pointed out, with the London market tightening its belt and the movement of some major primary carriers away from under-priced business, the New York market “should see more business and better priced business in H2 to continue market growth.” Maher said: “In a market heavy with capacity, we are seeing new underwriting discipline. The challenge is whether the discipline can be sustained.”

Epting also commented on growth opportunities in the Northeast – especially outside the five boroughs of New York.

He explained: “Many carriers have a strong underwriting appetite for E&S providers outside of the New York area, as they have been performing well for insurers. With this steady flow of new business throughout other areas of the Northeast, there a several key growth opportunities we are seeing for E&S providers, specifically contractors, distressed real estate, professional liability services, retail operations, liquor liability and special events.”