Issues & Answers Special Advertising Section:
July 2021

Issues & Answers: New Trends in Specialty Coverage

Davis Moore, WSIA President and Vice Chairman Brokerage, Amwins, said recently released statistics demonstrate the financial strength and operating performance of the wholesale market. “Looking ahead, key drivers of growth will be the strong economy, increased demand for solutions to emerging risks, and continued product innovation,” he said. Following are excerpts of an interview.

Davis Moore
President, WSIA
Vice Chairman Brokerage, Amwins

“A report from the 15 states with surplus lines stamping offices indicates that premium is continuing to grow, an increase of 15.1% over the prior year during the first quarter of 2021.”

At a Glance

A nonprofit association of insurance professionals and specialty market leaders dedicated to the wholesale distribution system.
Serves nearly 700 member firms representing approximately 1,600 offices and tens of thousands of industry professionals.
Provides world-class member services including networking, education, talent development, legislative advocacy and promotion of the value of wholesale distribution.

What is WSIA and who are its members?

The Wholesale & Specialty Insurance Association, WSIA, is a trade association that serves the entirety of the wholesale, specialty and surplus lines insurance industry. WSIA’s members are domestic and international wholesalers, wholesale-dedicated insurance markets and service provider members comprising the U.S. wholesale insurance distribution system.
The wholesale distribution system delivers tremendous value to retail agents and insurance consumers. WSIA members specialize in hard-to-place, complex, unique or high-capacity risks. Surplus lines insurers are able to cover unique and hard-to-place risks because, as nonadmitted insurers, they can react to market changes and accommodate the unique needs of insureds. This results in cost-effective solutions for consumers that are not “one size fits all,” but are skillfully tailored to meet specific needs.

During a time of rapidly evolving risks, what trends are surplus lines insurers seeing?

The E&S segment continually innovates and develops new solutions, and emerging risks are an area where the industry excels. While cyber is not a new risk, we have seen that its form and impacts are changing and expanding, and it’s an area where insureds need true expertise. We are also seeing construction on the rise, and the energy sector is in a strong rebound, so both are rising needs. It is important for agents and insureds to remember there is never a cost associated with seeking a wholesale quote, so it’s risk free. A 2016 Conning Inc. analysis concluded that wholesale distribution does not increase the cost of the transaction to the insured, which makes consulting a wholesale expert a common-sense approach for insurance buyers, particularly in emerging risks.

How is the financial stability of the wholesale market?

The market is at a record level of surplus lines premium, and surplus lines carriers continue to maintain a higher proportion of secure financial ratings than the overall property/casualty market. AM Best’s 2020 Special Report, U.S. Surplus Lines – Segment Review, found growth of 12.8% in surplus lines direct written premium in 2019, with surplus lines premium totaling a record $56.3 billion and no financial impairments in the surplus lines segment during 2019, in contrast to 13 admitted property/casualty company impairments during the year.