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 all states maintain a list of eligible surplus lines companies, and some maintain a list of those that are not eligible to do business in that state.

Top 25 U.S. Surplus Lines Groups By Direct Premiums Written, 2021

($000)

Rank Group Direct premiums written  Percent of total U.S. surplus lines market
  Lloyd's Market (1) $13,871,953 16.8%
1 Berkshire Hathaway Ins. Group 4,212,256 5.0
2 American International Group 4,177,807 5.0
3 Markel Corporation Group 3,530,213 4.2
4 Fairfax Financial (USA) Group 2,997,286 3.6
5 W. R. Berkley Insurance Group 2,820,382 3.4
6 Nationwide Group 2,611,335 3.1
7 Chubb INA Group 2,442,535 2.9
8 Liberty Mutual Insurance Companies 2,208,819 2.6
9 XL Reinsurance America Group 1,906,397 2.3
10 Alleghany Insurance Holdings Group 1,660,032 2.0
11 Sompo Holdings U.S. Group 1,624,567 1.9
12 Starr International Group 1,440,373 1.7
13 QBE North America Insurance Group 1,284,541 1.5
14 Tokio Marine U.S. PC Group 1,258,541 1.5
15 AXIS U.S. Operations 1,243,936 1.5
16 Zurich Insurance U.S. PC Group 1,195,708 1.4
17 Everest Re U.S. Group 1,063,466 1.3
18 Argo Group 1,061,974 1.3
19 CNA Insurance Companies 1,029,061 1.2
20 Great American P&C Insurance Group 984,303 1.2
21 Arch Insurance Group 963,358 1.2
22 Hartford Insurance Group 947,578 1.1
23 Travelers Group  906,111 1.1
24 Munich-American Companies 875,991 1.0
25 James River Group 870,944 1.0
  Total, top 25 $45,317,514 54.8%
  Total, top 25 and Lloyd's $59,189,467 71.6%
  Total U.S. surplus lines market $82,652,576 100.0%

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

Source: ©AM Best – used with permission.

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