U.S. Surplus Lines Insurance Market Outlook - 2027
The U.S. surplus lines insurance market size was valued at $52.1 billion in 2019 and is projected to reach $125.9 billion by 2027, growing at a CAGR of 15.2% from 2020 to 2027.
U.S. surplus lines is a type of insurance policy, covers unique and unusual insurance items which are typically not covered under standard insurance policies. It provides special coverage for personal belongings &events, commercial property, and other risks associated with unusual needs in the market. While covering nontraditional needs, the surplus lines insurance provides services to several industry verticals such as environmental, healthcare, energy, construction, and others. Furthermore, special jewelry, guns & antiques, unforeseen wedding postponement, renters insurance, and private mortgage insurance among others are some of the examples of surplus lines insurance.
Increase in large corporate institutions which requires directors &officers (D&O), fiduciary &employment practices liability (EPL), and other such significant risk transfer coverages are major U.S. surplus lines insurance market trends. In addition, development in underwriting divisions in terms of pricing adequacy, risk selection, capacity optimization & coverage design, and rapid growth in mergers & acquisitions globally are some of the factors drive the U.S. surplus lines insurance market growth. However, management of legacy policy & claims systems, and implementation of technologies in customized solutions are some of the factors limit the growth of U.S. surplus lines premiums in the U.S. surplus lines insurance market. On the contrary, investment in developing unique customer & industry segment and enhance new product offerings in the untapped potential of emerging economies globally. As a result, these are some of the factors expected to provide lucrative for U.S. surplus lines insurance market opportunity in the upcoming years.
On the basis of coverage, the general business liability segment dominated the U.S. surplus lines market share in 2019 and is projected to maintain its dominance during the forecast period. However, the allied lines sector is expected to attain significant growth, due to increased earthquakes, hurricanes, disasters and other such natural calamities through allied lines insurance gained larger premium amount in the market.
By Coverages
General Business Liability Insurance accounted for the highest market share in 2019
The report focuses on the growth prospects, restraints, and trends of the U.S. surplus lines insurance market analysis. The study provides Porter’s five forces analysis to understand the impact of various factors such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers on the U.S. surplus lines insurance market.
Segment review
The U.S. surplus lines insurance market analysis is segmented on the basis of coverage, distribution model, and application. In terms of coverage, it is segmented into general business liability, fire insurance, inland marine, commercial multi-peril, allied lines, and others. Based on distribution model, the market is segmented into retail agents, wholesalers, and others. On the basis of application, it is bifurcated into commercial and personal.
The report analyses the profiles of key players operating in the U.S. surplus lines industry including AXA, American International Group, Inc., Aegis Security Insurance Company, Berkshire, Hathaway Inc., Chubb, Lloyd's, ProSight Global, Inc., Swiss Re, The Travelers Indemnity Company, and Zurich. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.
By Distribution Model
Wholesaler segment is projected as one of the most lucrative segments.
COVID-19 impact analysis
With unprecedented amounts of risk and uncertainty in the insurance industry, U.S. surplus lines insurance has been moderately impacted due to COVID-19 outbreak. In addition, insurers in the country are compelled to respond to COVID-19 claims for their insured and review the legislations under the covered perils in the market. Furthermore, the surplus lines insurance has historically been exempted from the traditional insurance rates and several states in the country are imposing retroactive coverage of COVID-19 claims for their policyholders in the market. However, insurers are reimbursing claim settlements and their policyholders are typically not benefiting from state-level guaranty fund protections.
Top impacting factors
Rapid growth of large corporates
Rapid growth in large corporates and employing more than 5,000 employees, requires more complex &a wider range of customized coverages for their firms. These firms are involved in complex risks such as directors &officers (D&O), fiduciary &employment practices liability (EPL), and other such risk in across multiple countries globally. For instance, a survey conducted by RIMS, which is a global not-for-profit organization, projected that in 2018, among 511 large corporates, with nearly 69% of the organizations purchased directors & officers (D&O) coverages under U.S. surplus lines services.
Furthermore, these large corporates highly demands for customized underwriting coverages for high value & risks, which are included in surplus lines portfolio in the market. Thus, rise in large corporates is becoming major growth factors for U.S. surplus lines insurance market growth.
By Application
Personal Applications would exhibit the highest CAGR of 19.1% during 2020-2027
Invest in developing unique customer & industry segment
With an increased demand and awareness toward surplus lines in U.S., the insurers have an opportunity to invest in new forms of innovation in order to develop existing product portfolios in the market. In addition, to enhance unique customer & industry segment, the key players are expected to streamline and simplify the distribution channel and provide better user experience for both the commercial & personal insured in the market. Furthermore, to unlock the data & information, which enables the development of business performance, the insurers have an opportunity to invest in finance & actuarial functions, data management & analytics and accelerate prime source for financial management information in the market. Therefore, investment in these business developments are expected to provide lucrative opportunities for insures in the upcoming years.
Key Benefits for Stakeholders:
- The study provides an in-depth analysis of the U.S. surplus lines insurance market share along with the current & future trends to elucidate the imminent investment pockets.
- Information about key drivers, restrains, and opportunities and their impact analysis on the market size is provided in the report.
- Porter’s five forces analysis illustrates the potency of the buyers and suppliers operating in the industry.
- An extensive analysis of the key segments of the industry helps to understand the U.S. surplus lines insurance market trends.
- The quantitative analysis of the U.S. surplus lines insurance market from 2020 to 2027 is provided to determine the market potential.
U.S. Surplus Lines Insurance Market Report Highlights
| Aspects | Details |
 By Coverage |
|
 By DISTRIBUTION MODEL |
|
 By Application |
|
 Key Market Players | Nationwide Group, AXA, American International Group, Inc., Zurich American Insurance Company, Lloyd's, Markel Corporation, Berkshire Hathaway Inc., Chubb, ProSight Global, Inc., Swiss Re |
Analyst Review
U.S. surplus lines providers are looking forward to invest in developing unique customer & industry segment in the market. In addition, larger corporate institutes & growing mergers & acquisitions are the major segments taking coverage for U.S. surplus lines. Therefore, insurers are having lucrative opportunities to develop and enhance new product offerings in the untapped potential of emerging economies especially in the Asia-Pacific region. However, this scenario is changing and the year 2019 has witnessed an increase in sale of surplus lines policies due to increased mergers & acquisition and rise in large businesses demanding for these premiums. Consequently, there is significant increase in commercial segment taking coverage for U.S. surplus lines policy, due to on-going political risk, cyber & confidential data risk, errors & omission (E&O) risk, and other such risks involved in the businesses of commercial sectors in the market.
The U.S. surplus lines market is fragmented with the presence of key vendors such as Lloyd's, American International Group, Inc., Berkshire, Hathaway Inc., Nationwide Group, and others. Lloyd's and America International Group dominated the U.S. surplus lines market in terms of revenue in 2019 and are expected to retain dominant throughout the forecast period. Some of the key players profiled in the report include AXA, Aegis Security Insurance Company, Chubb, ProSight Global, Inc., Swiss Re, The Travelers Indemnity Company, and Zurich. These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.
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