Iannone Insurance & Risk Management
Welcome to Iannone Insurance and Risk Management in Ft Myers, Florida. We are an independent insurance agency that specializes in Excess and Surplus Insurance. We’ve been operating since 1992 and are proud to serve our community in all things insurance and risk management. Fully understanding Excess and Surplus insurance requires us to back up a few steps and return to some of the more basic concepts of insurance.
Need A Call Back?
Simply fill out your name and number and a representative will call you shortly.
Frequently Asked Questions About Excess & Surplus Lines
1What is Excess & Surplus Lines Insurance?
Excess and surplus lines insurance is a segment of the insurance market that allows consumers to buy property and casualty insurance through the state regulated insurance market, where policyholders, agents, brokers and insurance companies all have the ability to design specific insurance coverages and negotiate pricing based on the risks to be secured. “Freedom of rate and form” has given the E&S market the ability to adapt quickly to changing market conditions and those of the consumers and commercial entities seeking this unique insurance protection. 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.
2What is an admitted carrier or standard lines carrier?
An admitted carrier or standard carrier is an insurance company that has received a license from the state department of insurance for the authority to write specific lines of insurance. These companies are also bound by rate and form regulations, and are strictly regulated to protect policy holders from a variety of illegal and unethical practices, including fraud. Admitted carriers are also required to financially contribute to the state guarantee fund, which is used to pay for losses if an insurance carrier becomes insolvent or unable to pay the losses due to their policyholders.
3What is an excess and surplus (E&S) lines carrier and how is it different from an admitted carrier?
An E&S carrier is not required to be licensed by the state, but is allowed to do business in that state. Sometimes, E&S carriers are also referred to as non-admitted or unlicensed carriers; however, E&S carriers are financially stable companies that are regulated in other ways. Most states require that E&S carriers submit financial information, articles of incorporation, list of officers, and other general details. They also cannot write insurance that is typically available in the admitted market, they are not protected by the state guarantee fund, may pay higher taxes, may only write a policy if it has been rejected by three different admitted carriers, and only when the agent placing the business has a surplus lines license. AAMGA member State Surplus Line and Stamping Offices, as well as insurance departments in the states maintain a list of approved surplus lines insurance companies. Policies can only be written by companies on this approved list. Excess and Surplus line carriers are not bound by most of the rate and form regulations imposed on standard market companies, allowing them the flexibility to change the coverage offered and the rate charged without time constraints and financial costs associated with the filing process. This is good for both the company and the policyholder.
4Why am I insured by an E&S company?
Most likely, your policy is written by an E&S carrier because the standard carriers have elected not to cover your insurance needs. The reasons for this vary, but could include the following: 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.
5Why does the disclosure on my policy state that the policy is written by a non-licensed or non-admitted insurance carrier and what does that mean?
When your policy is written by an Excess & Surplus line insurance carrier, a disclosure of that is required by law. What it means to the policyholder is that IF the carrier were to become insolvent, the policyholder is not eligible for recourse through the state guarantee fund. However, studies including those by the respected A.M. Best organization, which monitors and reports on insurance company solvencies and other important issues, show that the percentage of excess and surplus line carriers that become insolvent is lower than the percentage of admitted carriers that suffer the same fate. The key consideration is to do business with those insurance organizations that are financially strong and have the ability to pay claims when a covered loss occurs, whether the company is an E&S carrier or not.
6Is the E&S market regulated?
As mentioned earlier, the E&S market is regulated in a different fashion than licensed or admitted companies. While the amount of direct regulation is less and the amount of free market competition is greater, specifically in the forms used and the rates charged, the E&S industry is still watched very closely. They also cannot write insurance that is typically available in the admitted market, they are not protected by the state guarantee fund, may pay higher taxes, may only write a policy if it has been rejected by 3 different admitted carriers, and the agent placing the business must have a surplus lines license. States also maintain a list of approved surplus lines companies, and policies can only be written by companies on the approved list.
There are generally three types of excess and surplus insurance:
- Non-standard risks with unusual underwriting characteristics
- Unique risks for which admitted insurers don’t have a standardized policy or pricing option
- Capacity risks, meaning the client needs a higher level of coverage than standard carriers provide
E&S Insurance: The Evolving Economy’s Impact on the Future of Excess & Surplus Coverage
- This is the 1st item
- This is the 2nd item
Increasing Risk Drives Demand for E&S Insurance
The world is getting riskier, and as a result, demand for E&S insurance solutions is growing. States like California and Florida are experiencing extreme weather conditions, leading to an uptick in the number of natural disasters they face. Major insurers are exiting these states, leaving a coverage gap for residents. Additionally, inflation and supply chain issues are driving up property reconstruction costs and premiums. These and many other risk factors are making E&S coverage increasingly sought after by both individuals and businesses.
E&S Brings Custom Coverage to Hard-to-place Risks
E&S insurance is often seen as a last-resort option, when traditional insurance policies cannot cover a particular risk. However, this perception is changing, and E&S is now looked upon as a tool in a hard market. This is particularly true when it comes to covering risks that are difficult or too complex for standard insurance policies. For example, high-net-worth homes which have luxury features and higher quality materials might require more thought in insuring. E&S coverage allows for more flexibility in coverage and pricing, enabling insurers to provide custom-tailored policies for difficult risks. E&S regulation is different from the traditional admission market, which means that insurers can offer pricing and coverage options that the state-approved market cannot. This also allows for coverage pricing and greater flexibility to adapt policies to fast-changing market conditions.
Blindspots of the Admitted Market Rate: Why Custom Coverage is Increasingly Sought After
The admitted market (the standard market) is facing difficulties in finding adequate rate pricing for hard-to-place risks. Claims are getting costlier, and certain areas of the country are seeing increased risks. Homes today are frequently valued much higher than previously, which makes obtaining insurance coverage more challenging. The problem is compounded by a slow rate-approval process, which makes it harder for insurers to offer coverage that reflects the current market. The rapid economic changes brought about by the pandemic in 2020 continue to affect the insurance industry in unimaginable ways. State rate-approval processes are based on trends over decades. However, the current market has seen extreme economic fluctuations take place over a relatively short period of time. For instance, areas that once saw minimal wildfire risk are now experiencing unprecedented exposure. In states like California, admission policies must cover wildfire exposure, which leaves insurers with little room to maneuver. With this level of exposure, many insurers are withdrawing from California, which negatively impacts high-value home insurance coverage.
The SME Market is Increasingly Tailored to E&S Policies
Small to medium-size enterprises (SME) often require coverage that is tailored to their needs and specific risks. Traditional insurance policies are not well suited to offer custom policies for these businesses. As a result, E&S products have become increasingly important for SMEs keen on covering risks that could put them out of business. With E&S policies in place, SMEs can protect themselves from unique risks with coverage tailored to their specific needs. This has become increasingly important due to the growing diversity, complexity, and evolving market conditions, which demand innovative insurance solutions that go beyond the established parameters set by the traditional insurance market.
The Sharing Economy and the Need for E&S Insurance
Platforms such as Airbnb and Uber have revolutionized how people get around and travel. The sharing economy has created a new set of risks that traditional insurance policies cannot cover. For instance, if a guest in an Airbnb damages the property, standard policies may not cover the loss. Additionally, if a passenger in an Uber/Lyft vehicle is injured, the currently held insurance policies may fall short in covering the resulting damages. E&S solutions provide much-needed coverage that traditional policies cannot offer for these unique emerging risks.
E&S Insurance Offers a Globalized Solution to Evolving Risks
The global economy is becoming increasingly interdependent, which means that risks are spreading across borders more quickly than ever before. To effectively combat these risks, insurers need to develop solutions that are tailored to the specific risks that exist within individual countries and regions. E&S insurance is uniquely suited to tackle this challenge, with insurers able to provide policies that are specifically designed to meet the needs of specific regions and countries.
The Growing Importance of E&S Insurance in a Changing Economy
The economy is rapidly changing, with high-value homes in hard-to-insure states on the rise. The percentage of homes valued upward of a million dollars has doubled since 2010, and today, one in five homes is worth one million dollars or more in thirteen coastal cities. Los Angeles and Austin have seen the most significant increases in ultra-luxury homes since 2021. However, most of the cities with the highest share of affluent homes are found in states experiencing insurance crises. In response, more insurers are switching to E&S to cover the increasing volume of high-value assets found in these hard-to-insure states.
E&S Helps Agents Offer Custom Solutions for High-Net-Worth Customers
Despite the increasing demand for E&S coverage, many agents remain hesitant to offer these solutions. Persistent misconceptions inhibit some agents from offering innovative custom solutions at the expense of their high-net-worth customers missing out on tailored coverage that would meet their needs. However, insurers that embrace E&S policies have an opportunity to stand out in the insurance market and thrive by offering custom solutions to high-net-worth customers.
E&S Market Regulation: Myths vs. Reality
One of the most significant myths about E&S insurance is that it is not regulated. However, this couldn't be farther from the truth. E&S lines are subject to different regulations than admitted policies, but they are still subject to regulation. Admitted policies and rates must be filed with the state, which approves and regulates them. Consequently, the state will provide coverage through its guaranty association or fund if the insurer fails. The company's domicile and the Surplus Lines Stamping Office regulate E&S policies. A specialist agent, licensed outside the state of the insured, underwrites the policy to meet exceptional requirements. The insured's agent also must prove that their request was denied by the admitted market. While the process can seem complicated, a reputable carrier like Iannone Insurance and Risk Management can streamline the process and provide an underwriting system that ensures an easy application process.
E&S Insurance Offers Insurers More Flexibility and Reliability
E&S insurance provides insurers greater flexibility in deductible options, coverage, pricing, and self-insuring to a certain limit. This flexibility can help turn a hard "no" in the admitted market into a "yes" in an E&S market. Coverage is more customizable, allowing insurers to accommodate unique risks and underwrite policies to reflect the market's quickly changing demands. Insurers offering E&S insurance policies have a distinct advantage, as they can offer tailored and quick responses to market demands and provide coverage for unique emerging risks.
The E&S Insurance Landscape of Tomorrow
The future of E&S insurance is bright and growing as the world continues to evolve, and new risks emerge. E&S coverage offers solutions for previously hard-to-insure risks, provides flexible and custom policies tailored to individuals and businesses, implements risk management solutions, and meets the demands of a shifting economy. At Iannone Insurance and Risk Management, our focus on custom solutions, data-based risk analysis, expert underwriting, and ability to incorporate technology has positioned us to provide the necessary coverages that our partners and their customers increasingly need, both now and in the future. We are dedicated to offering comprehensive risk management services that help you navigate the ever-growing complexity of tomorrow’s world, today.