Insurance | Surplus Lines Overview

An Overview of the

SURPLUS LINES

MARKET

The distribution system of insurers and intermediaries that provides insurance for risks not accepted, or covered, by the standard market.

ADMITTED vs SURPLUS

TYPES OF RISK

Distressed

High Risk

High Capacity

Emerging

SAMPLE COVERAGES

Liquor Liability

Coverage for damages or injuries caused by intoxicated patrons

VIDEO

We Hold The Risk

INSURER

CARRIER/COMPANY

Offers innovative products that effectively and profitably insure risks. Also performs policy management for processes not delegated to an MGA.

LLOYDS SYNDICATE

A marketplace of investors, grouped in syndicates, who are represented by underwriters (MGAs) to write insurance and reinsurance.

REINSURER

Works with insurers to cover risk beyond a certain limit, essentially providing insurance for the insurers.

Accessing the Surplus Lines Market requires

RELATIONSHIPS

INSURED

I Need Insurance

The individual or entity that needs coverage for a risk declined, or not offered, through the Standard Market.

I Know Specialists

RETAIL AGENT

Appointed by Wholesalers as the retail sales force. Often local to the Insureds they represent.

The Specialists

WHOLESALERS

An intermediary between the Retail Agent and the Insurer with expertise in the risk submitted. Does not typically work directly with the Insured.

SURPLUS LINES BROKER

Brokers will use their relationships with MGAs and/or Insurers to return quotes to the Retail Agent. Brokers do not underwrite.

MGA/MGU/PA

Holds underwriting authority for one or more Insurers, allowing them to provide quotes and bind coverage on behalf of the Market.

PROCESS MODEL

POLICY LIFECYCLE

There are several steps to document, analyze, and price a risk. These steps require a combination of entities and processes to ensure a proper contract is created and maintained.

Submit>

Data, usually in the form of an application, captured to understand the risk that requires coverage.

Quote>

Terms of the presumed coverage (e.g. premium, limits) provided to the Retail Agent for review with the Insured.

Renew^

Policies are typically in-force for 1 year and must be renewed to continue coverage.

Rate>

A multiple applied to the amount of exposure (e.g. value) to determine the premium.

Bind>

Approving the risk for temporary coverage until the policy can be issued.

Endorse*

Any changes to the policy after it has been issued (e.g. adding another property)

Underwrite>

A review of the risk to determine whether coverage should be written

Issue>

Generating of the policy related documents to form the complete contract.

Cancel X

Policies can be cancelled at any time.

WIN/WIN

The Surplus Lines Market has flexibility to modify the loss exposure, premium, and terms to meet their appetite, while also providing coverage that would otherwise not be available. Without the Surplus Lines Market, Insureds would be required to go without coverage or to self-insure.