Surplus lines premium in Texas is up by 14.97 percent compared with the end of the third quarter last year, with reported premium exceeding last year’s by nearly $900 million for the same time period. The major line of Other Liability is up 15.75 percent, with the premium increase in this line alone accounting for nearly 44 percent of the total surplus lines increase year to date.
With Other Liability’s premium growth exceeding the overall increase, the line made up 42.75 percent of all writings through the third quarter. Premium for Fire (including Allied Lines), the second largest line of reported premium, made up 31.34 percent of all surplus lines writings through the end of the third quarter.
The strength of these major lines in the surplus lines market more than made up for the four lines that were down year-to-date Sept. 30. Total surplus lines premium at the end of the third quarter was more than $6.88 billion, exceeding total surplus lines writings for each of the entire years of 2016, 2017, and 2018, just shy of 2019’s total year writings of $6.95 billion and about $1.04 billion less than the year-end total last year. The third quarter slowed the pace of growth, which in the first quarter was 20.10 percent and at midyear, 16.23 percent.
SLTX reported that each month’s recorded premium year-to-date was the highest ever recorded for that particular month. The largest premium volume in 2021 was reported in June at $947.48 million and the lowest monthly total was in February with $509.48 million.
Policy count at the end of the third quarter declined by 2.38 percent from the same period last year, but average premium per policy was up 17.78 percent. As of Sept. 30, the average premium per policy was $12,948.37; at this time last year, the average premium per policy was $10,993.65. The stamping office reported a 0.1 percent increase in item count.
Multi-state premium rose by 17.24 percent compared with the third quarter last year, accompanied by a 3.0 percent increase in multi-state policy count. Multi-state premium made up 4.74 percent of the taxable premium reported to the stamping office through Sept. 30, 2021. By the end of last year, multi-state premium stood at 4.25 percent of total premium. Average premium on multi-state policies was $146,357, as of the end of the third quarter.
The stamping office also reported a 17.4 percent increase in policy filings for exempt commercial purchasers (ECPs); there were 2,201 policies for ECPs in the first three quarters of 2021, compared with 1,874 in 2020. The number of industrial insureds rose 3.0 percent from this time last year, with 100 policies filed in 2020, and 103 so far this year for this category of insureds exempt from diligent search of the admitted market.
Within the Other Liability line, the coverages showing the greatest increases were Excess/Umbrella, up nearly $239.1 million, or 23.99 percent; GL-Premises Liability Commercial, up nearly $67.27 million, or 8.01 percent; Professional D&O, up $56.6 million, or 156.00 percent, and GL-Pollution, up $13.58 million, or 9.43 percent. Results that appear to be major declines in subcategories of Other Liability are actually dollars captured in new subcategories. GL-Contractual moved from negative premium in 2020 to positive, with $4.16 million reported in the subcategory by the end of the third quarter this year. Overall Other Liability was up $400.43 million.
Four of the seven subclassifications within Fire (including Allied Lines), represent new reporting elements for 2021 when residential and commercial policies were separated for reporting purposes. Overall, the line was up $44.96 million, or 2.13 percent. Reported premium for Oil and Gas Property within this line rose by $6.77 million, or 30.29 percent.
In addition to Other Liability, there were 11 other lines reporting multimillion dollar and double digit percentage increases over the third quarter last year: Commercial Multiple Peril up $218.49 million, or 86.25 percent; Other Commercial Auto Liability, up nearly $81.02 million, or 36.59 percent; Allied Lines, up nearly $80.21 million, or 47.05 percent; Credit, up $30.51 million, or 38.03 percent and Ocean Marine, up $21.41 million, or 123.98 percent. Commercial Auto Physical Damage was up nearly $21.40 million, or 12.75 percent, and Inland Marine, up nearly $13.40 million, or 17.49 percent.
While Surety premium through the third quarter barely reached $0.24 million, the dollar increase compared with last year was more than $10.66 million, as the 2020 premium total was negative. There is similar news for Fidelity, which was negative at the end of the third quarter last year, but had more than $5.04 million reported so far this year.
Among the premium lines that make up less than one percent of reported surplus lines premium, two lines crossed the threshold for multimillion dollar increases as well as double digit or more percentage increases: Burglary and Theft, with a $4.51 million increase, or 174.29 percent gain, and Products Liability, up $2.96 million, or 15.42 percent. Smaller increases were reported in Earthquake, All Other A&H, Private Passenger Auto Physical Damage, and Other Private Passenger Auto Liability. Other Private Passenger Auto Liability moved from negative premium at the end of the 2020 third quarter to a positive premium of $45,049.
The largest line with a premium decrease was Homeowners Multiple Peril, down $22.53 million, or 12.87 percent. Other premium decreases for the first three quarters of 2021 were reported in Medical Malpractice, down $8.38 million, or 10.36 percent, and Group Accident and Health, down $6.2 million, or 11.16 percent. Aircraft (all perils) and Farmowners Multiple Peril were also down.
Group Accident and Health was down despite the capture of premium recorded earlier this year as workers’ compensation. Greg Brandon, SLTX executive director, told the board on Sept. 23 that TDI instructed SLTX to reintegrate the occupational accident premium data into the Group Accident and Health line of business for reporting purposes. The result is there is no premium reported for workers’ compensation year-to-date.
Notably, the lines posting the decreases made up 4.06 percent of premium recorded through the end of the third quarter. These same lines made up 5.31 percent of surplus lines premium at the end of 2020.
Since January, there were more filing subcategories within lines of business; the result is less premium coded as aggregate write-ins for other lines of coverage.
By the end of the third quarter, SLTX collected $5.94 million in stamping fees, a 33.9 percent decrease from last year at this time. Stamping fee revenue continues to exceed SLTX’s actual expenses, meaning the unrestricted fund balance continues to grow, and as of the Aug. 31 report to the board, exceeds SLTX’s allowable fund balance by $21.67 million.
Online filings were up slightly, to 98.3 percent for the year, compared with last year’s 97.7 percent. There were 803,110 filings made with the stamping office through Sept. 30, up 0.1 percent from the 802,321 filings made through the third quarter last year.
As of Sept. 30, SLTX attributed 53 percent of surplus lines premium reported through the third quarter to TSLA members.