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 The Excess & Surplus Market: An Untapped Book of Business

According to the Bureau of Labor Statistics, there were 393,830 independent sales agents in the United States as of May 2018. That’s a significant number of people vying for the same piece of the insurance “pie.” But how well is the insurance industry serving insurance agents and brokers? Ask any insurance professional and they will tell you the industry has seen better days.

A.M. Best — the U.S.-based rating agency that focuses on the insurance industry — reported the U.S. property/casualty industry recorded a net underwriting loss of $23.5 billion for year-end 2017. The loss was primarily due to an estimated $52.9 billion paid out for catastrophes** such as Hurricane Harvey and Hurricane Maria — adding up to more than double what property and casualty insurers handled in 2016. In comparison, the estimated net underwriting loss for 2018 was $12.1 billion which is cut in half from 2017 but still more than historic averages.

Marketplace changes also affected the ability to write business, with limitations, exclusions, and gaps becoming more stringent. Companies such as Scottish American Capital and Zurich with too much capital are not making money, canceling policies and closing markets. Mergers and acquisitions also tainted risk “appetite,” pricing and availability.

How, then, does the future look for the insurance agent or broker? In an increasingly challenged, ever-competitive industry, they would be wise to mine hard-to-place, specialty business — an untapped resource for increasing book for business. Says Rick J. Lindsey, Chairman and CEO of Prime Insurance Company — a leading excess and surplus lines insurance carrier that specializes in providing solutions for specialty and declined risks — “Specialty business is a niche that will differentiate the agency field force and provide more options for solutions.”

E&S Delivers for Agents and Brokers

Instead of kicking hard-to-place risks to the curb, the excess and surplus (E&S) lines market provides specialty markets the ability to handle risks that have been declined, non-renewed, or have unique underwriting characteristics. Simply put, an E&S lines insurance carrier like Prime Insurance Company says “yes” when standard, admitted insurance carriers cannot or will not provide coverage —enabling agents and brokers to expand their capabilities and book of business.

Typical types of risks written in E&S lines include those that:

  • Are high risk, such as explosive manufacturing, firearms makers, hazardous haulers
  • Do not fit standard market underwriting, such as bars and taverns with dance floors, vacant properties, taxi cabs
  • Require higher limits than offered by standard markets, such as $10,000,000 + liability umbrellas or $5,000,000 + property limits
  • Require specialty coverage, such as special events, concerts, hole-in-one contests, and unique situations
  • Have excessive or otherwise unacceptable loss history

Fact is, without the E&S market, clients would be forced to go uninsured or self-insure their risk exposure, which means they’re on their own if an incident, claim or lawsuit occurs.

Mining Specialty Business Starts with Current Book of Business

In many cases, specialty services provide security and coverage that clients didn’t know they needed or wanted but should have. Agents and brokers can uncover these untapped specialty opportunities by evaluating their prospects and current book of business. Do they have dogs or exotic pets? Do they own firearms? Do they train, mentor or provide care for others? Rent or own recreation devices? Serve on Board of Directors? Volunteer or coach? By evaluating their prospects and clients, agents and brokers may very well find they haven’t addressed these risks or perhaps, they didn’t know how to place these risks.

Lindsey offers these guidelines: Put the clean risks with the traditional market; put the very hard-to-place, difficult risks that take time and other resources with a specialty excess and surplus lines carrier who will help provide a solution for these risks.

Building Your Specialty Business with Prime Insurance Company

When seeking out an E&S carrier, it’s important to partner with a company that doesn’t compete with current markets but writes the business being declined. Prime Insurance Company, Inc. writes E&S business in all 50 states and has an A (excellent) A.M. Best rating. Prime doesn’t compete with current markets, but provides coverage on all or part of the risk, allowing for more new business opportunities for agents and brokers.

Prime offers 30+ years of diversified, underwriting experience for very hard-to-place risks, including commercial and garage liability, personal lines, commercial auto (not available in all states), specialty and professional liability. Over the last three decades, Prime has formed a number of strategic relationships with some of the world’s premier insurance organizations, including Lloyd’s of London, Gen Re, and RLI. Prime is also a member of the Wholesale & Specialty Insurance Association (WSIA).

Prime has offices in Salt Lake City, Chicago, and Naples, Florida, and has insured virtually every type of risk, from a brilliant pyrotechnics show, a world-record helicopter bungee jump into the caldera of an active volcano above a pool of molten lava, to two brothers attempting to swim the English Channel, and many other extraordinary risks.

Bottom Line

The E&S market is viable and growing. In 2018 alone, excess and surplus lines premiums in the U.S. totaled $31.4 billion, up 11.3% from 2017. Several states saw record-breaking premium totals, including Nevada and Washington up 23% respectably. Premiums as a whole in the last 10 years are up 48.2%. The E&S market — and Prime Insurance Company — allow agents and brokers to grow their capacity and revenue, and capture more of the insurance “pie,” while fulfilling an important customer need.


To learn more about Prime Insurance Company, contact Frank Lukacs, Chief Marketing Officer, frankl@primeis.com or 801-304-5573.

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