Chubb has gained authority to write surplus-lines-insurance business in New Jersey, its own state– an apparent new trend.

The company announced that it has received approval from the New Jersey Department of Banking & Insurance to convert Chubb Custom Insurance Company into a domestic surplus-lines-insurance company.

The New Jersey Insurance Department gained authority to do so through the Reinsurance and Surplus Lines Stimulus Act, which was signed into law by Gov. Chris Christie in 2011.

According to the latest data, New Jersey joined Illinois, Arkansas, New Hampshire, North Dakota and Delaware in allowing insurers it regulates to sell surplus-lines products directly to customers in its states. The bills authorizing this have quietly been passed over the last several years, industry officials say.

Explaining the reasoning behind such laws, Richard A. Brown, a top surplus-lines lawyer based in San Francisco, says, “The concept [used to be] that if licensed or admitted insurers in the state were unwilling to write the risk, the risk could be 'exported' to the 'non-admitted' or surplus lines market outside the state. That has changed.”

Brown adds, “Today, the surplus lines market is recognized by regulators and lawmakers as a critical and highly reputable segment of the property and casualty insurance industry.”

Brown says states “are realizing that it makes little sense in the real world to prevent an surplus-lines insurer from insuring risks such as airports, bridges, harbors, and similar major state infrastructure risks, as well as other specialty risks, in its state of domicile.”

According to SNL Financial, Chubb wrote $421.5 million in surplus-lines premiums in 2012, a 13.6 percent increase over the $371.2 million in direct surplus-lines premiums it wrote in 2011.

Commenting on the New Jersey legislation that allowed the company to write surplus-lines business in its home state, Chubb's President of Commercial and Specialty Lines Paul J. Krump says, “Passage of this act made New Jersey one of only a few U.S. states to permit a domestic insurer to offer surplus-lines products to customers in its state of domicile.”

“Chubb already is a major surplus-lines insurer throughout the country, but converting Chubb Custom Insurance Company to a 50-state eligible surplus lines insurer will make it even easier to provide customers with our experienced underwriting, valuable loss control recommendations and responsive claim services.”

Special Reports /

Chubb Takes Advantage of Recent Law; Will Write Surplus-Lines Business in Home State

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