A Firm Foundation: How Insurance Supports the Economy

The surplus lines market, a group of highly specialized insurers that includes Lloyd’s of London, exists to assume risks that licensed companies decline to insure or will only insure at a very high price, with many exclusions or with a very high deductible. To be eligible to seek coverage in the surplus lines market, a diligent effort must have been made to place insurance with an admitted company, usually defined by a certain number of declinations, or rejections, by licensed insurers, typically three to five. Many states provide an export list of risks that can be insured in the surplus lines market. This obviates the diligent search requirement.

The terms applied to the surplus lines market—nonadmitted, unlicensed and unauthorized—do not mean that surplus lines companies are barred from selling insurance in a state or are unregulated. They are just less regulated. Each state has surplus lines regulations, and each surplus lines company is overseen for solvency by its home state. More than half of the states maintain a list of eligible surplus lines companies and some a list of those that are not eligible to do business in that state.

Lloyd’s of London is a significant writer of surplus lines insurance, both for corporations and individuals. Lloyd’s members conduct their insurance business in syndicates, each of which is run by a managing agent. According to A.M. Best, in 2017 the Lloyd’s market represented 23 percent of the total surplus lines market share and wrote $10.3 billion in surplus lines premiums. The largest surplus lines for Lloyd’s are commercial property, general liability, cyber and professional indemnity.

Top 25 U.S Surplus Lines Groups By Direct Premiums Written, 2018


Rank Group Direct premiums written Percent of total U.S. surplus lines market
  Lloyd's Market $11,755,285 23.6%
1 American International Group 3,548,994 7.1
2 Markel Corporation Group 2,496,504 5.0
3 Berkshire Hathaway Ins. Group 2,198,681 4.4
4 W. R. Berkley Insurance Group 1,808,925 3.6
5 Nationwide Group 1,802,256 3.6
6 Chubb INA Group 1,474,717 3.0
7 AXA U.S. Group 1,443,759 2.9
8 Fairfax Financial (USA) Group 1,410,796 2.8
9 Liberty Mutual Insurance Companies 1,259,268 2.5
10 Alleghany Insurance Holdings Group 889,047 1.8
11 Zurich Financial Services Group NA 857,245 1.7
12 Argo Group 814,328 1.6
13 Tokio Marine U.S. PC Group 786,331 1.6
14 QBE Americas Group 735,075 1.5
15 Sompo Holdings U.S. Group 717,619 1.4
16 AXIS U.S. Operations 684,316 1.4
17 James River Group 661,454 1.3
18 Starr International Group 634,174 1.3
19 Great American P&C Group 633,022 1.3
20 CNA Insurance Companies 572,259 1.1
21 Swiss Reinsurance Group 563,396 1.1
22 Aspen U.S. Insurance Group 545,449 1.1
23 Arch Insurance Group 453,668 0.9
24 Navigators Insurance Group 434,687 0.9
25 Everest Re U.S. Group 410,803 0.8
  Total, top 25 $39,181,255 79.4%
  Total U.S. surplus lines market $49,890,353 100.0%

(1) Because Lloyd’s Market company structure differs from traditional insurance companies, A.M. Best does not include it in the ranking in this chart.

Source: AM Best. Used with permission.

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