While it suffered an 11.2% increase in premium growth last year, the market for surplus and surplus lines now faces the combined challenge of COVID-19's impact and the current hurricane season, say executives.
Lloyd & # 39 ;s of London has been "very actively trying to get the right balance" in achieving increased gross premiums and a "sustained insurance profit", says Peter Barrett, London-based global specialty insurance manager at Hamilton Managing General Agency Ltd.
He spoke during a panel discussion on the state of the surplus line market during the Kansas City, Missouri-based Wholesale & Specialty Insurance Association virtual conference on Friday.
Joel Cavaness, president of Rolling Meadows, Illinois-based Risk Placement Services Inc., a unit of Arthur J. Gallagher & Co., said the surplus line market is expanding and contracts are based on what happens in the standard line market.
The biggest effect of last year's changing market has been the shortening of borders, with "carriers no longer interested in setting out" large borders, Cavaness said. While it's pretty easy to fill a program with just four or five pieces, he said, "we now have to take the puzzle" with up to 40 different pieces, which is more difficult, he said.
But the segment continues to grow and become more creative, says Cavaness.
Richard Schmitzer, President and CEO of Richmond, Virginia-based James River Insurance Co., said that the sector sees more business from the standard markets, with limited compression creating more opportunities for investment in the E&S sector. This year, growth will be "even higher than it was in 2019 and will extend to 2021 as well," he said.
Danielle Wade, President and CEO of E&S line broker Jackson Sumner & Associates PC, based in Boone, North Carolina said that even if the economy does not perform as well as it should and the market does not see increased exposures, growth will come from others areas.
"Everyone out there" is creatively looking for ways to make money. , She said. More people are "moving into our segment of the industry" and hopefully the economy will bounce back soon, she said. and Midwest-derecho, August's severe weather event. That is "70% of the hurricane season left", Schmitzer stated.
"Laura, like all major natural disasters, emphasizes the need for the kind of coverage that (surplus) marketplace provides", Mr. Barrett said.
COVID-19 has changed market needs and become "a huge exposure", as people have started working remotely, "without the same level of password protection and firewalls," Cavaness said.
The session was moderated by WSIA Executive Director Brady Kelley.