With $334.88 million more in surplus lines premium reported for the first quarter of 2021 compared with the same period of 2020, the surplus lines market grew by 20.10 percent, exceeding last year’s overall growth by year-end of 13.98 percent. Last year’s first quarter ended with a 14.50 percent increase over 2019’s first quarter.

With a record-breaking $877.51 million in premium in March alone, the single month results saw 2021 premium exceeding 2020’s by 40.9 percent, according to an April 9 news release from the Surplus Lines Stamping Office of Texas. Premium reported this March was the largest single month ever reported in SLTX’s 33-year history, exceeding the $772.8 million record set in May 2020, said SLTX.

SLTX, in its news release, added the significant increase for the month may be partially attributed to filings that were delayed due to the extensive power outages in February, even though this impact is difficult to quantify, given the 60-day timely filing requirement.

SLTX said the increase is primarily attributable to the top five or six insurers and brokers, as well as the continuing hard-market conditions. SLTX’s data analysis noted that at least eight percent of the total premium can be attributed to renewals which were historically reported in later months. SLTX also identified that the transactions reported were primarily renewals. Another factor affecting the total was fewer cancellations and reversals reported, compared to the same period in 2020. Moving forward, the stamping office said there is no indication that Texas surplus lines premium will continue this significant upward trend.

Greg Brandon, executive director of the Surplus Lines Stamping Office of Texas, pointed out that some of the shifts of premium dollars in the SLTX report can be attributed to the more detailed coding that became effective Jan. 1.

According to SLTX, policies filed during the quarter were down by 7.4 percent, even though the number of policies filed in March alone was up by 3.0 percent. The average premium per policy was up by nearly 30 percent, which can be attributed not only to higher rates but also to higher insured values. Average premium per policy was $12,458 in 2021, compared with $9,603 in 2020, a 29.73 percent increase.

At the end of the first quarter 2021, the largest dollar gain of $139.78 million was in Other Liability, which made up 46.42 percent of surplus lines premium in the first quarter. This represents an increase of 17.72 percent over the first quarter of last year. Last year ended with Other Liability up by 9.10 percent.

The next highest dollar gain in premium was in Commercial Multiple Peril, which exceeded last year’s first quarter results by $47.38 million, a 65.99 percent gain. This gain solidified Commercial Multiple Peril’s third place ranking in coverages sold in the surplus lines market, with 5.96 percent of all surplus lines first quarter writings. At the end of last year, the line made up 4.85 percent of all surplus lines premium.

A small part of this gain can be attributed to additional sub-classifications that were included in the Commercial Multiple Peril line, making their way out of being counted as other lines. In 2020, only Property-Package and Oil and Gas Package coverages were counted under the Commercial Multiple Peril code. Beginning in January, the line became home also for Builders Risk coverages and property classes of residential packages. Together, these additional lines added $32.55 million in premium to the line, a significant part of the $47.38 million growth of the line.

Fire, including Allied Lines, which made up 26.86 percent of first quarter premium, was the next highest dollar gain, at $46.5 million. The line was up 9.47 percent, compared with the first quarter last year.

The next major dollar increase was in Other Commercial Auto Liability, which was up $35.6 million, or 63.92 percent; Other Commercial Auto Liability made up 4.57 percent of all first quarter premium reported to SLTX. Allied Lines, which made up 3.68 percent of total taxable premium reported to the stamping office during the first quarter, was up $32.5 million, or 79.23 percent.

The new coding of the largest line, Other Liability, tells a clearer story of what coverages have the dominant share of this line. However, since last year’s reports were not so differentiated, gains in these areas will become clearer in next year’s reporting. The dominant code within Other Liability, so far this year, is Excess/Umbrella, which was up $117.6 million, or 42.02 percent. Reporting for Other Liability is made up of 23 codes, six of which are new and likely from other codes within the line in prior reporting, making comparisons of other subcategories or codes in this line unreliable until next year.

Likewise, reporting for Fire (including Allied Lines) has been reorganized from three codes to six, all of which had reported premium during the quarter, but defy comparison where the codes did not previously exist. Dominating the line was Property-Commercial Fire/Allied Line, with $523.5 million, in the coverage line that reported total premium of $537.4 million.

Coming into the plus column this first quarter after posting lower year-end results in 2020 compared with 2019 were Ocean Marine, Products Liability, All Other A&H, and Fidelity.

New to the SLTX report is Workers’ Compensation coverage, which includes only filings for Accident and Health-Occupational Accident coverage, a coverage that the NAIC Annual Statement Instructions groups in Workers’ Comp. Premium reported in this line was 0.16 percent of all premium reported during the quarter. Still, All Other A&H, which previously included this coverage, showed an increase for the first quarter.

Declines in surplus lines premium were spread over five lines which together made up 3.82 percent of premium reported for the quarter. These same lines made up 6.38 percent of surplus lines premium at the end of the first quarter last year and 5.31 percent at year-end 2020. The largest line showing a decrease was Homeowners Multiple Peril. A spokesperson for SLTX noted that some of the premium previously reported in this coverage line migrated into the new residential code of Property-Residential Package (Property and General Liability), which is included in Commercial Multiple Peril’s total for the quarter.

Other lines showing year-to-year decreases of more than one million dollars of premium for the first quarter were Medical Malpractice, down $11.2 million, or 38.82 percent, and Group Accident and Health, down $7.3 million, or 34.66 percent. Also down were Aircraft (All Perils) and Farmowners Multiple Peril. Of the five lines showing decreases in this first quarter, Group A&H and Farmowners Multiple Peril showed a premium decrease in the first quarter last year.

Aggregate Write-Ins for Other Line of Business is down $2.7 million, or 94.13 percent. Brandon said that some of this decline is attributable to the additional codes that SLTX made available in January for reporting more in accordance with statement instructions of the NAIC.

“It’s hard to say that is exactly the reason for every dollar lower,” Brandon said. “This coverage use is restricted to very specific coverages that have been predefined, as they do not fit into other lines of business.” As examples, Brandon said coverages for patent infringement, intellectual property infringement, infringement abatement, unauthorized trading, condemnation, and patent defense are just some of the coverages that remain reportable as Aggregate Write-Ins.

Removed altogether from SLTX’s premium report for the first quarter this year was Boiler and Machinery, which reported no premium in 2020 and less than $700 in 2019. The coverage code remains available for future reporting.

Multi-state premium for the first quarter of 2021 was nearly $66.5 million, or 3.3 percent of the total taxable premium reported for the quarter, a 19.4 percent increase over the first quarter last year; policy count of multi-state insureds was up by 5.4 percent. Policy count for the quarter was 665, compared with last year’s first quarter policy count of 631. Average premium per policy on the multi-state risks was $99,941, up from average premium per policy by the end of the first quarter last year of $89,813.

SLTX continues to receive mailed filings, but noted that as of the end of the quarter, 98.2 percent of all filings were made online. As of the end of the first quarter, SLTX collected $2.07 million in stamping fees, more than a third of the income SLTX projected for 2021 and more than a quarter of the budget SLTX planned for the year. The transition to the lower stamping fee, said Brandon during the March board meeting, will become more apparent in the next three quarters. This first quarter included the filing of policies with inception dates prior to Jan. 1, when the lower stamping fee became effective.