Surplus lines premium surpassed $31 billion, while premium bearing transactions neared 2.8 million in the first six months of this year, according to the 2022 midyear report of the US Surplus Line Service and Stamping Offices.
Premium was up 32.4% compared to the same period in 2021. Year to year, premium grew at the highest percentage rate since 2009, when the stamping offices started reporting on the data.
Transactions were also up 9.4% on the first half of 2021.
The 9.6% increase in premium bearing transactions is also the highest percentage growth since 2017, according to a Wholesale & Specialty Insurance Association update.
Stamping offices traditionally report higher premiums in the third and fourth quarters, according to WSIA, with most predicting that economic factors will drive continued growth in the market for the rest of the year.
“The report confirms a continuing hard market, and the New York numbers closely track the averages across the 15 states,” said Dan Maher, executive director of the Excess Line Association of New York.
“While an unprecedented level of startup carriers have entered the excess and surplus market, it has not yet resulted in significant downward pressure on rates.”
The rate of return on bonds and treasuries has improved somewhat, according to Maher. However, inflation, social inflation, property catastrophic risk exposures and war and other risk exposures from Russia’s Ukraine invasion “are all counterweights to aggressive underwriting,” Maher said.
Some states were record-setting during the first two quarters.
Texas premium reported in April exceeded a $1 billion milestone, which was “a first for the state of Texas market,” according to Greg Brandon, executive director, Surplus Lines Stamping Office of Texas.
May and June have also exceeded the threshold, Brandon said.
In Nevada, the “largest increases” were in construction, property, and professional liability, said Maria Muzea, Nevada Surplus Lines Association executive director. This could indicate that rising construction material prices and inflation more widely could be driving premium growth, according to WSIA.
Mark Shealy, chief financial officer, Florida Surplus Lines Service Office, said that Florida’s growth stemmed from general insurance market conditions.
“These upswings are due to a reduction in capacity in the admitted markets causing both a hardening of pricing and an increase in transactions with the E&S marketspace,” Shealy said.