Premiums written for surplus lines jump to record $82B in 2021

Total U.S. surplus lines’ direct premiums written increased to a record of more than $82 billion in 2021, with strong prospects for the sector, barring investment market volatility, A.M. Best Co. Inc. said in a report issued Tuesday.

The report said despite the myriad challenges, including the pandemic, that the property/casualty insurance industry has faced, nonadmitted or surplus lines companies “have been able to generate net underwriting and operating gains.”

The report said consolidation of specialty market distributors, including wholesalers and managing general agents, continues to help to reshape the market.

Merger and acquisition activity “has helped new and surviving entities provide a wider array of products and services, better positioning them to deal with the transformation of retail agents’ buying needs,” the report said.

The report said Best expects surplus lines insurers to continue to benefit from underwriting results, organic capital generation and “intelligent management of balance sheet factors,” but also warns that investment market volatility “could constrain overall operating earnings and capital.”