Allied Market Research published a report, titled, “U.S. Surplus Lines Insurance Market by Coverage (General Business Liability Insurance, Allied Lines Insurance, Fire Insurance, Inland Marine Insurance, Commercial Multi-Peril Insurance, Commercial Auto Insurance, and Others), Distribution Model (Retail Agents, Wholesalers, and Others), and Application (Commercial and Personal): Country Opportunity Analysis and Industry Forecast, 2020–2027.” According to the report, the U.S. surplus lines insurance market garnered $52.15 billion in 2019, and is expected to generate $125.92 billion by 2027, witnessing a CAGR of 15.2% from 2020 to 2027.
Drivers, Restraints, and Opportunities
Increase in number of large corporations, rise of underwriting divisions, and surge in mergers & acquisitions drive the growth of the U.S. surplus lines insurance market. However, efficient management of legacy claims & policy systems and emergence of technologies for customized solutions hinder the market growth. On the other hand, development of unique customer & industry solutions and untapped potential in emerging regions create new opportunities in the coming years.
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Covid-19 Scenario
- During the lockdown, insurance businesses have been continued as they come under “essential businesses” category.
- A “Business Interruption Insurance Coverage Act of 2020” draft bill has been proposed by the U.S. Congress, and if the bill is passed, the surplus lines insurance companies that provide business interruption insurance need to pay coverage for viral pandemics. However, currently, the business interruption insurance policies apply only when there is an incident related to physical loss (or forced closedown due to physical damage).
- Surplus lines insurers have been asked by the government to provide information regarding their business interruption and coverage provided as per their commercial insurance policies.
- The U.S. government might establish the “Pandemic Risk Insurance Act of 2020” or PRIA; however, it may take a lot of time to arrive at a decision, given the pandemic and political environment.
The general business liability insurance segment to maintain dominant share by 2027
Based on coverage, the general business liability insurance segment contributed to the largest market share in 2019, accounting for nearly half of the U.S. surplus lines insurance market, and is estimated to continue its dominant share during the forecast period. This is attributed to insurers offering flexible coverage options along with specialty products & premises risks that can be negotiated fully. However, the inland marine segment is expected to portray the highest CAGR of 16.8% from 2020 to 2027, owing to surge in requirements for raw materials & other high-value properties through water and land.
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The wholesaler segment to maintain its lion’s share in terms of revenue by 2027
Based on distribution model, the wholesaler segment contributed to more than four-fifths of the U.S. surplus lines insurance market in 2019, and is projected to maintain its lion’s share in terms of revenue by 2027. This is attributed to the maintenance of standard policies and offering different types of protection to fulfill particular needs of the customers. In addition, wholesalers have been improving their systems and procedures to benefit both groups & their customers. However, the retail agents segment would grow at the highest CAGR of 18.0% during the forecast period. This is due to retail agents being operational in large independent agencies that offer different coverage and personalized services.
The commercial segment to maintain its dominance during the forecast period
Based on application, the commercial segment accounted for nearly 88% of the U.S. surplus lines insurance market in 2019, and is estimated to maintain its dominance during the forecast period. This is due to unique features and coverage offered to commercial users as per individual business requirements and avoidance of intricate application & claims processes. However, the personal segment is expected to register at the highest CAGR of 19.1% from 2020 to 2027, owing to increased income, geographical locations, and changing personal preferences that influence expenditures over customized coverage.
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Leading Market Players
- AXA
- American International Group, Inc.
- Aegis Security Insurance Company
- Berkshire Hathaway Inc.
- Chubb
- Lloyd’s
- ProSight Global, Inc.
- Swiss Re
- The Travelers Indemnity Company
- Zurich American Insurance Company
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