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NAPSLO: Specialty Lines Capacity Unchanged and Submissions Up in 2009

Source: NAPSLO

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Posted on 29 May 2009

Despite an economic slowdown, the majority of wholesale brokers and E&S carriers are not seeing a decline in capacity or a tightening of terms along specialty lines, but are seeing an increase in submission activity, according to the results of a recent survey of members of the National Association of Surplus Lines Offices (NAPSLO).

The survey, which was conducted in mid-May 2009, compared results of the first quarter in 2009 to the same period of 2008

“NAPSLO members confirmed that pricing, capacity and terms in specialty lines remain relatively flat, but recognized that a major catastrophic event or changes in the economy could have a significant impact on capacity,” said John Wood, NAPSLO president. “During these uncertain times, wholesale brokers and surplus lines carriers remain strong with ample capacity to meet specialty lines needs in any market cycle.”

Nearly half of the respondents to the survey said that they were not seeing a change in the availability of specialty insurance coverage; 38% said they were seeing an increase in coverage availability and only 12% said they were seeing a decline in availability.

Regarding terms, 44% said the limitations on coverage were about the same as in the first quarter of 2008, while 31% said terms were loosening, and 22% said terms were either tightening or tightening slightly.

More than half of the respondents reported submission activity increasing, with 32% reporting a slight increase and 22% reporting consistent increases. Only 23% reported declining submissions and 22% reported submissions were about the same as in the first quarter of 2008. Specialty lines where respondents reported seeing the greatest increase in submission activity in 2009 were Property, General Liability, Casualty, and Cat Exposed Property.

When asked what factors would have the potential to have the greatest impact on availability and pricing on specialty lines in the remainder of 2009, respondents most frequently cited the economy, catastrophic losses and declining capacity among carriers and reinsurers.

Respondents were also asked about pricing and retention level changes along 10 specialty lines of business: Property, Cat Exposed Property, Casualty, Professional Liability, D&O-Private, D&O-Public, Healthcare and Medical Malpractice, Excess & Umbrella, Environmental, and Transportation. Of the 10 areas, Cat Exposed property was the main area where respondents consistently saw increases in pricing while respondents saw decreases in Property, Casualty, Professional Liability, Excess and Umbrella, and Transportation.

While availability, terms, pricing, and submission activity were comparable to 2008, respondents reported decreased retention levels in many of the 10 specialty lines surveyed, led by Casualty, Property, Excess & Umbrella and Transportation. While significant decreases were reported along these lines, the majority of respondents reported retention levels were about the same along all lines.


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