Wes Robinson, National Property President at Risk Placement Services (RPS), discusses the state of the E&S property insurance market with WRIN.tv during the recent NAPSLO Convention. He says the market conditions in the surplus property market as “very soft.” For the past several years property rates have been declining. This past year saw significant declines, particularly in the catastrophe market. He suspects rates will continue to slide in the next quarter and into 2016.

In addition to tropical storms, insurance carriers are concerned about earthquake. Since there has not been a major earthquake in California in quite some time, California earthquake rates are very soft, although concern about the “Big One” keep carriers up at night. Carriers also look at tornado risks very closely because losses can be like “death by a thousand cuts.” While losses would not put a company out of business, but it could adversely affect their results. Flood is the most conservatively written peril, besides tropical storm. The surplus market provides capacity for flood, but they tend to limit their line compared to tornado or earthquake insurance.

As the Government general expanded in recent years, its involvement in insurance programs like the NFIP, Citizen’s, and the Texas and Mississippi Wind Pool has actually decreased. Mr. Robinson notes that these programs tend to ebb and flow in size. Overall, Government is trying to push the risk to the private market.

In closing, Mr. Robinson says the major issues for the surplus lines market heading toward the end of 2015 are viability and profitability in a rate environment that is declining.

For more from the 2015 NAPSLO Convention, visit the WRIN.tv On Demand Library.

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