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Specialty insurers take lead in U.S. market in premiums

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Specialty insurers account for 56% of the total U.S. insurance market, or $315 billion in direct premiums written, up from 40% of the market in 2011, says investment manager Conning Inc.

In its report, “Specialty Insurance, Survival of the Fittest, 2016,” issued Wednesday, the Hartford, Connecticut-based firm divides the market into three categories: product specialists, such as workers compensation or medical professional liability insurers, which account for 44% of the specialty market; high-risk specialists, such as excess and surplus lines insurers, catastrophe-exposed homeowners insurers and nonstandard auto writers, which account for 37%; and “customer niche specialists,” such as those serving farm bureau members and other defined customer groups, which account for 19%.

“Specialty focus alone usually is not the sole determinant of success,” says the report. “Timing, management and execution are also equally, if not more, important ingredients.”

The report states that in the near term, increasing competition “may drive pricing down and have a negative impact on specialist profitability.”

However, there are three positive market forces at work for specialty insurers: the battle for underwriting talent; advancements in data analytics, which will improve insurers' ability to write many specialty risks profitably; and emerging risks, which “will continue to differentiate specialties and provide opportunities for growth,” the report says.