FEATURES
WHOLESALE E&S MARKET REGIONAL PERSPECTIVE
WEST
The West has the highest number of stamping offices in the US, making it somewhat of a bellwether for the rest of the country. It’s also home to the three states with the biggest premium increases nationwide: Utah and Idaho both saw jumps of more than 40% compared to mid-year 2019, while Washington wasn’t too far behind with a premium increase of nearly 30%. “Population growth was significant in Nevada, Utah and Idaho,” says Thomas Joyce, executive vice president and chief underwriting officer at Nautilus Insurance. “With the spike in construction, we will see continued growth in the E&S business.” Catastrophic fires and social inflation have also been major drivers in the E&S market in the West, especially in California, where premiums rose by 7.84% and filings went up by 3.21%. (The WSIA report did note a possible a lag in reporting due to extended filing deadlines in several states, including California.) More than 1.5 million acres have burned in the state so far this year; the fires that ignited in August have torched more than 1.1 million acres to date. The economic impact of these fires over the past couple of years has had a profound financial and psychological impact on carriers, according to Joyce. “The market in California is firm, if not hard,” he says. “There’s just not a lot of capacity around brush zones and little interest in writing property business in those areas. With that comes a spike in the cost of property insurance and package business.” Joyce adds that the casualty market in California is also very volatile with social inflation trends showing up in a more profound way. In Washington and Oregon, premium was up by 29.9% and 17.8%, respectively, and it’s expected the market will continue to harden in light of the ongoing social unrest in those states. “Any time there is political uncertainty or activism of this magnitude, it creates far too much uncertainty within the insurance
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MID-YEAR PREMIUMS: 2019 VERSUS 2020 Mid-year 2020
Mid-year 2019
$363 million $352 million
AZ CA
$4.6 billion $4.3 billion
FL
$4.2 billion $3.8 billion $89 million $64 million
ID
$1.0 billion $914 million
IL $311 million $303 million
MN
$256 million $242 million
MS
$468 million $424 million
NC $196 million $189 million
NV
$2.4 billion $2.3 billion
NY $252 million $213 million
OR
$784 million $703 million
PA
$3.9 billion $3.5 billion
TX $216 million $154 million
UT
$646 million $498 million
WA $0
$100m
$200m
$300m
$400m
$500m
$1bn $2bn $3bn $4bn $5bn Source: WSIA 2020 Mid-Year Stamping Office Report
“Any time there is political uncertainty or activism of this magnitude, it creates far too much uncertainty within the insurance industry” Thomas Joyce, Nautilus Insurance industry, which results in increased scrutiny of those risks in and around those cities. Pricing business during or after this kind of unrest will be a major challenge for the
market,” Joyce says, adding that the industry reaction will be aggressive, and companies that act sooner rather than later stand to benefit the most.
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