Excess and Surplus Lines FAQs
Most AAMGA Wholesale Insurance members are entrusted to write both admitted and excess and surplus lines insurance by insurance companies who have delegated underwriting authority to them. They and other excess and surplus line insurance professionals may also be members of the National Association of Professional Surplus Line Offices (NAPSLO); www.napslo.org, which works in conjunction with the AAMGA on numerous matters of mutual interest to the respective organizations.
The E&S originated when those who needed insurance coverage were unable to secure it from the standard carriers (or admitted carriers) due to a variety of reasons (e.g., new entity or one that does not have a adequate loss history; one that has unique coverage requirements; or a loss record that does not fit the underwriting requirements of a standard carrier).
The E&S industry is comprised of a variety of insurance companies writing what is referred to as "main street" business. The general contractor, trucking company, restaurant, bar or hotel, entities with environmental, professional liability and employment related risks and other unique exposures, are the staples of the business. A few large organizations will write the oil refineries, aircraft liability, property coverage on a communications satellite, etc.
•The risk does not meet the guidelines of the standard market due to age, location, loss history or cancellation; The policy limits exceed the guidelines for the standard market;
•The risk is "outside the box" of what the standard carriers are comfortable writing. Sometimes, this is referred to as an "unusual risk", as there is just no other way to describe pet insurance, coverage for a hole-in-one event, protection for an amusement park, etc.;
•The risk is "extraordinary" and the standard carriers may not be comfortable covering such a risk. Usually these are very large exposures with equally high potential for loss such as aviation liability insurance, protection for a demolition business, etc.