Who are the Largest Insurance Brokers in the Excess and Surplus lines Insurance Market?

The E&S Market place may be lost to the common individual. How do manufactures of invasive medical products get insurance? How does a large outdoor event like the Taste of Chicago obtain insurance? How does a college athlete who may have the potential to become professional insure his or her knee in case they fall victim to a career threatening injury? The answer is the Excess and Surplus Market. In the paragraphs to come I will attempt to explain how it works in a bit more detail and why it tends to be a bit more expensive than your typical insurance programs.

Insurance quite simply is the promise to pay claims. Whenever you have discussion with your local insurance agent his job is to place your insurance with a company who can indemnify you should you have a situation where you or your business become liable for claim. With this prevailing thought in mind the Wholesale Insurance Market works like this.

As you may or may not know some of of your biggest insurance companies are as follows: You and I ( AKA AIG insurance Group) State Farm, Geico, Allstate, Travelers, The Hartford. With the exception of AIG all of the latter insurance companies are considered standard market carriers. Meaning they have standard to which insurance risks they wish to insure and they are subject to state regulation in terms of the amount of premium they may charge. This companies are also in compliance with the State Guarantee Fund- a wrinkle of insurance I iwll cover at a latter date. As mentioned before Standard Carriers tend to shy away from risks such as Invasive Medical Products and Large Outdoor gatherings like the taste of Chicago.

When faced with such large risks your local insurance agent seeks out the services of and Excess and Surplus Lines Broker.

Brokers of Insurance are sales persons in the truest sense of the word. They are paid on commissions and represent both the underlying agent and the E&S carriers to which they are charged to place coverage with. They must known which markets like what particular risk and how much money your client must pay in order to access these markets. Many E&S Insurance carriers have Minimum Premiums North of $50,000! Ouch.

I believe the E&S markets are natural in the way they work. Take a state like Florida. It is widely known that certain areas of FL are extremely prone to Flooding and Hurricanes. The buyers of these properties know this as fact before they purchase or build their homes. With that in mind many standard lines insurance companies stray away form these areas because they are unable to receive adequate rate to cover all the potential of loss. Enter your E&S Insurance Market. Because many of this carriers write on a Non-Admitted basis they are not subject to the same rating rules of your standard carriers. They can determine a premium based on true exposure. As there are several competitors in this market place, premiums are developed in a true market. Therefore an individual becomes directly responsible when he or she chooses to buy or build property where severity to loss is high.