At the annual National Association of Professional Surplus Lines Offices, Ltd. (“NAPSLO”) convention, the surplus lines industry recently reported that it has seen an increase of 10-15 percent in submission volume over the last year. Although the price of most insurance written by surplus lines insurers has not increased (other than for insurance written on catastrophe exposed accounts), the industry reported that terms and conditions of such insurance is improving. For instance, surplus lines insurers have been able to increase the percentage that the customer will retain through a higher deductible.
The increases in submissions have signaled a return to growth in the surplus lines market, which is welcome after four years of declining premiums in the market. The decline of premiums for surplus lines insurers is attributed to standard market insurers writing risks that are traditionally written by surplus lines insurers to seek growth during the soft market. After a few business cycles, the standard market insurers re-examine the risk of certain lines of business or certain accounts that suffered severe losses and send these lines and accounts back to the surplus lines market.