Demotech Inc. Reveals Leading Multi-State Property/Casualty Insurers
In order to continue the discussion regarding what constitutes a Super Regional P/C Insurer™ and to give definition to this important group of insurers, Demotech Inc. analyzed year-end 2019 data for property/casualty insurance companies. This data was utilized to classify and stratify insurers reporting data to the National Association of Insurance Commissioners. This year marks the 14th year of this effort, as the original criteria and objective definitions for Super Regional P/C Insurers™ and our other company classifications were established in the Feb. 12, 2007, issue of Insurance Journal.
Demotech Company Classification System
The Demotech Company Classification System categorizes property/casualty insurers, not groups or families of insurers, into one of 11 categories based on an analysis of the data reported by the companies. The 11 categories that comprise the system are Nationals, Near Nationals, Super Regionals, Regionals, State Specialists, Coverage Specialists, Strategic Subsidiaries, Risk Retention Groups, Surplus Lines Carriers, Reinsurers, and companies with less than $1 million in direct premium written.
A company cannot be assigned to more than one category. Therefore, a company not designated as a Super Regional is given another classification, perhaps Near National, Regional, or State Specialist.
Super Regional Criteria and Thresholds
To determine the companies for the 2020 Super Regional Property/Casualty Insurer™ list, these specific, objective qualifying criteria and thresholds evaluated as of Dec. 31, 2019 were used:
- Active, individual companies;
- Reporting data using the property/casualty annual statement format;
- At least $1 million of direct premium written in each of two to 34 states;
- Less than 90% of direct premium written in any one state;
- Less than 90% of direct premium written in any one line of business;
- Policyholders surplus of at least $100 million;
- Net premium written of at least $50 million; and
- Direct premium written of at least $25 million.
In general terms, a Super Regional is an individual company writing multiple lines of insurance in multiple states. Risk retention groups, surplus lines insurers, and reinsurers are not eligible for the Super Regional category as they are assigned to their own classifications.
Prior to the establishment of an industry-wide definition, a number of property/casualty insurers had referred to themselves as Super Regionals. Demotech, the official research partner of Insurance Journal, has compared the data to the criteria and updated the list of Super Regionals for 2020.
The 2020 Super Regional Property/Casualty Insurers™
For 2020, 148 Super Regional Property/Casualty Insurers™ were identified. They are presented in this Insurance Journal Special Report both alphabetically and by size as ranked by direct premium written as of Dec. 31, 2019. For 2020, there are 12 Super Regional companies that were not classified as Super Regionals in 2019, as well as 15 insurers identified as Super Regionals in 2019 that have been reclassified into another category this year based on year-end 2019 information. Of the 148 Super Regionals for 2020, 68 have been designated as such for all 14 years that the Company Classification System has been applied.
Super Regional insurers are critically important to the insurance industry, and of particular importance to their agents, producers, and insureds. These companies are typically strong, stable markets that work hard for their agents, insureds, and their reinsurers.
Insurers and interested readers are encouraged to review the selection criteria and thresholds used to determine the 2020 Super Regionals. The selection criteria remain quantitative and transparent. Demotech is focused on setting benchmarks at levels that accurately categorize the industry. The relative consistency of the company type distribution over time suggests that the categorizations that have been established are valid and effective in classifying the industry.
It is important to reiterate that the Demotech Company Classification System is an objective stratification of the companies that comprise the industry based on their business models. It is not equivalent to or suggestive of ratings of the individual insurers.
Moreover, inclusion on the list of Super Regionals does not imply that a company is superior to companies that were not included in that classification.
Future issues of Insurance Journal will report on other categories in the Demotech Company Classification System.
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