California Surplus Lines Premium Take Soars
By Mark E. Ruquet
NU Online News Service, Jan. 9, 4:08 p.m. EST?Surplus lines insurers on the West Coast saw premium volume soar upward last year reflecting the continuing hard market, an industry group said.
The news came from the Surplus Line Association of California in San Francisco, which reported that for 2002 processed premiums showed a stunning increase of 104.5 percent over the 2001 premium total.
According to the Association, the $3.6 billion in calendar year 2002 premium is attributed to the hard market impact on prices.
The association said it processed a total of 331,835 insurance policies in 2002 compared to only 201,211 in 2001.
"Insurers have been hit hard by stock market woes, environmental hazard claims and the 9-11 terrorist attacks," said Ted Pierce, executive director of the association in a statement. "Insurance agents are turning more frequently to surplus line brokers to place difficult and hard to place accounts."
According to the association, average premium per policy increased $2,003, rising from $8,438 in 2001 to $10,441 in 2002.
Leading the increases were aviation at 341 percent; followed by excess liability with a 262 percent increase; professional liability rose 207 percent; and all-risk commercial rose 195 percent.
Mr. Pierce told the National Underwriter that generally the brokers were not surprised by the figures and had been predicting it would happen for the past two years. The numbers, he added, did not begin to increase in earnest until around mid-2002.
The feeling among the brokers, he added, is that the hard market conditions would continue at least through 2003, with no predictions beyond that.
Horst Lechler the association's chairman, and president of Anderson & Murison, in Los Angeles, said that brokers in California will continue to be challenged in 2003 to find coverage for their accounts. How difficult that challenge will be would depend on the carrier's fourth quarter results and whether some decide to re-enter the state, he added.
The Surplus Line Association of California is an organization of 460 surplus line brokers who are licensed by the state of California to negotiate and place insurance with non-admitted insurers.
The association reviews compliance and keeps records and serves as the official surplus line advisory organization to the California Department of Insurance. The association, established in the late 1930′s, has been in this advisory role for well over a decade, Mr. Lechler said.
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