Surplus Lines Premiums Fall Again

Brokers remain optimistic.

For a third consecutive year in 2009, the surplus lines industry’s DPW fell 4.1 percent, an improvement over 2008 where the DPW fell 6.2 percent.

Even so, the surplus lines industry’s drop in premiums came in at a higher rate than that of the overall property/casualty industry, where premiums overall fell 3.3 percent, according to an A.M. Best Co. special report.

Surplus lines carriers write tough risks, like general liability on small aircraft. Typically their premium gets squeezed twice in a soft market – first because rates are falling and second because they lose business to standard carriers, who look to expand their writings by entering businesses they normally shun.

The article paints a mixed picture, but one that roughly parallels the standard market. Rates are down, operating profits are pretty strong, but that’s built on favorable development from old years.

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