Issues & Answers Special Advertising Section
“The wholesale distribution system delivers tremendous value to retail agents and insurance consumers.”
What is the outlook for the market and WSIA members?
Through midyear 2018, 100% of surplus lines companies maintained secure AM Best ratings. For the 14th year in a row, the industry also reported no financially impaired companies, in contrast to the admitted property/casualty industry’s 230 known impairments in the same time period. A report from the 15 states with surplus lines stamping offices also indicates that premium is continuing to grow, as is the number of filings with those stamping offices. Comparing the first two quarters of 2018 to 2019, these stamping offices reported premium and filing increases of 12.7% and 5.2%, respectively. All of the measures point to the financial strength and operating performance of market. A strong economy and increasing demand for solutions to complex risks and new product innovation are key drivers of that growth.
How do emerging risks impact the wholesale, specialty and surplus lines industry?
Emerging and complex risks are not often matched with standard risk management solutions. Instead, they represent good opportunities for WSIA members, because the wholesale, specialty and surplus lines market is the innovative developer of coverages when the standard market is either unable or unwilling to consider them. There are always new risks to be insured; cyberrisk is a great and evolving example of that. Like many new products, specialty coverage has been critical to the development of cyber coverages that are now being written by standard carriers. Technology continues to evolve, and related coverages will continue to grow in all segments of the marketplace.
What value does wholesale distribution bring to a transaction for an emerging risk?
The wholesale distribution system delivers tremendous value to retail agents and insurance consumers. WSIA members are technical experts who truly are specialists in creating innovative solutions for complex risks. Retail agents and insureds can look to WSIA-member wholesale brokers for access to markets, coverages and options they might not be able to find in the standard market. The wholesale broker’s expertise can help agents and their clients identify the right option for the insured in the right market. And, while there is never any cost associated with seeking a wholesale quote, a 2016 Conning, Inc. analysis concluded that wholesale distribution does not increase the cost of the transaction to the insured.