AM Best is revising its outlook on the excess and surplus (E&S) lines insurance segment to positive from stable, citing increased business due to declining capacity in commercial lines and some personal lines markets, along with strong underwriting results driving favorable operating profitability and strengthened capital positions.
The Best’s Market Segment Report, “Market Segment Outlook: US Excess and Surplus Lines Insurance,” notes that admitted carriers continue to constrict their underwriting criteria, leading accounts to seek coverage in the E&S market. Lines of business being cast off by admitted carriers include commercial auto and directors’ and officers’ liability. Cyber liability and coverage for the expanding legal cannabis industry also continue to leverage the capabilities of E&S carriers. As these accounts tap into the core competencies of the surplus lines market, these E&S participants are posting more favorable underwriting results and greater top-line growth than those in the broader property/casualty industry.
The report also states that the use of the E&S lines structure has expanded. “Fronting carriers are applying the freedom of rate and form to meet insureds’ coverage needs, and delegated underwriting authority enterprises such as managing general agents are working with carriers to develop customized coverage solutions, all at the same that challenging conditions in the reinsurance market are leading participants to surplus lines underwriters,” said Greg Williams, senior director, AM Best “This is providing a significant boost for the E&S segment, and we expect it remain in high demand.”
To access a copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=337414 .