The following of classes of business are often insured in E & S Line Market: -
· Unusual or unique exposures
· Non Standard Business
· Insured needing high limits
· Insured needing usually broad coverage
· Exposures that require new forms
Unusual or unique exposures
One of the requirements of the Commercial Insurable loss exposure is that large number of similar exposure units should exist. If the exposure does not meet with this requirement standard insurers are often unwilling to provide this coverage. This type of insurance known as non-appearance insurance is written by E & S Insurers. For example, singer not showing up for a performance, in which sponsors suffer a financial loss because of his non-performance.
Non Standard Business
Sometimes loss exposures do not meet the underwriting requirements of the standard insurance market. This might be evidence of poor loss experience that cannot be adequately controlled and the premiums of the standard insurers normally charged are not adequate to cover these exposures. An E & S insurer might be willing to write these types of coverages with a premium substantially higher than the standard insurers would charge.
Insureds needing high limit
Some businesses demand very high limits of coverage especially for liability insurance. A standard insurance company might not be willing to offer limits as high as insured needs. The E & S market often provides the needed limits in excess of limits written by standard insurers.
The traditional insurance market uses standard coverage forms developed through advisory organizations like insurance services office and American association of insurance service. When broader coverages are necessary often insureds seek such coverage from E & S market.
Excess & Surplus Line Regulation
E & S insurance is usually written by non admitted (un licensed) insurers. These insurers are not required to file their rates and policy forms with state insurance departments, which gives them more flexibility than standard insurers. Although, non-admitted insurers are generally exempted from laws and regulations applicable to licensed insurers, the E & S market is subject to regulation. More states have surplus lines laws that require that all E & S business be placed to Excess & Surplus Line broker. The E & S broker is licensed by the state to transact insurance business through non-admitted insurers. When an insurance producer seeks insurance with non-admitted insurers he or she must arrange an E & S broker to handle the transaction.
Who Provides Insurance
