Explaining Excess & Surplus Insurance, a peace of mind solution during unprecedented times

By: Advocate Brokerage

2023 is a year bringing continued challenges to the property and casualty insurance market. We have entered a period of rate tightening and underwriting correction due to rising reinsurance rates, rising inflation, rising interest rates, climate change, workforce shortages, large settlements, and worsening global economic conditions. During Advocate Brokerage’s 54-year history, we have maintained a modest amount of Personal Lines Excess & Surplus (also called non-admitted) Insurance business for residential homes. Most of the non-admitted coverage we have provided was for homes under construction, residences in Florida, property located in coastal and negatively elevated areas; in addition to homes that were non-renewed due to claims.

We remain in this period of insurance and reinsurance companies re-calibrating their rates while restricting coverage and capacity in undesirable locations. At the same time, our valued clients continue to buy and build homes in those same locations which they view as desirable.

What is Excess & Surplus Insurance

Excess & Surplus Insurance is a specialty market that offers coverage for things that standard insurance carriers won’t cover. A non-admitted product doesn’t have to go through a long approval process with the state insurance commissioner that admitted ones do; however, that doesn’t mean they are unregulated. Excess & Surplus products must report to the state surplus lines office, they pay state taxes, they need to be licensed, and like standard insurance carriers they are subject to financial ratings.

Increased Risk Has Led To A Shift to Excess & Surplus

The market is beginning to see a shift. Non-admitted lines are experiencing extensive growth. With many standard carriers denying coverage for homes because of the increased risk, we believe we will continue to see a decrease in capacity of the number of admitted policies being written. The current industry challenges include:


Inflation continues to be an issue. The cost of building materials is at an all-time high rising by 18.6% in 2022. When you couple that with the supply chain issue, this makes rebuilding higher than ever before. Additionally with rebuilding times increased, the cost of insurance for displacement (known as “loss of use”) also rises.

Inflation in 2022 was at its highest point in 40 years


Out-of-control lawsuits against insurance companies and the abuses in the legal system involving the insurance industry have led to massive increases in the cost of insurance claims. When faced with a fraudulent claim the insurance company is faced with a difficult choice, they can either pay the legal fees to fight the lawsuit or settle out of court. It is such a problem that Florida lawmakers held a special session and put legislation in place to help provide some relief but much of the bill is still tied up in court.

$1 Million plus judgments have increased by 235%


Reinsurance is insurance for insurance companies to help pay out damages after a catastrophic loss. It is a way for the insurance company to insulate itself from risk. Reinsurance has minimal to no regulations by the states and negotiate terms and rates with insurance carriers typically on an annual basis.

The cost of reinsurance is increasing by 30% – 70%


Catastrophic weather events are occurring more frequently and the losses that result has had a dramatic affect in insurance rates across the country.

Hurricane Ian is estimated to cost up to $74 billion

Winter Storm Uri is expected to cost up to $130 billion

Regulation Struggles

The regulation market has been unable to keep up with the changing environment. This creates a significant limit in the ability for carriers to offer coverage to the high-net-worth market

The bottom line is that we will continue to obsess about your insurance coverage. We strive to ensure that we are offering the best possible insurance coverage for your individual needs. We are always exploring the best options for our clients, and this is no different for those homes that may need to be insured with a non-admitted product. Historically we’ve placed coverage with carriers such as Lloyds of London or Lexington, however with the shifts that have been occurring in the insurance industry during these unprecedented times, we’ve seen some of our elite carrier partners looking to provide Excess & Surplus coverage options (including Pure Programs, Cincinnati Specialty, Chubb E&S, and Vault).

We believe in educating each client we serve. The knowledge we provide is geared to aid our customers in making better-informed decisions when it comes to their insurance coverage. We truly have your best interests at heart, and always strive to offer insurance that’s personal! As always, we are here to answer any questions you may have. Please never hesitate to send us an email or pick up the phone and call!

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