Transformations in California's Surplus Lines Insurance Sector
The surplus lines insurance sector in California is undergoing significant and lasting transformations. According to a recent analysis by The Surplus Line Association of California (SLACAL), part of the 2025 Annual Report titled "All In on California's Surplus Lines Market," the study highlights how factors like legal challenges, exposure to natural disasters, capital limitations, and regulatory compliance requirements are affecting risk placement and insurance coverage accessibility in this complex market.
Shifting Risk Allocation Patterns
The report, unveiled during SLACAL's annual meeting at Los Angeles' Biltmore Hotel on February 3, 2026, reveals a lasting shift of risk allocation from traditional insurance markets to surplus lines. This signifies a fundamental change in the insurance industry's landscape, rather than just a temporary fluctuation. The event was attended by key industry representatives, such as senior brokers, underwriters, and other insurance professionals, emphasizing its importance.
Benjamin J. McKay, SLACAL's CEO and executive director, stated, "California's insurance market evolved rather than fluctuated chaotically. The data represents a redefined structure. The observed growth is enduring and influences decision-making, capital allocation, and accountability.
Market Concentration and Global Role
The report provides insights into market concentration, focusing on top brokerages and insurance parent companies based on premium volumes. It illustrates how capital and distribution are aligned within California’s surplus lines sector, marking it as a pivotal hub in the global excess and surplus lines market. This is driven by the complexity and scale required for effective risk management and transfer.
Leadership and Future Direction
The annual meeting also established the new board of directors' terms, who are tasked with steering the market into its next phase. Key board positions include Chair John Washington, Senior Vice President at Arch Insurance Group; Vice Chair Sarah Nichols, Senior Vice President at Crum & Forster Insurance Brokers, Inc.; and Secretary/Treasurer James Faley, Vice President at Vela Insurance Services, LLC. Additional board members hail from various specialty and underwriting firms, ensuring comprehensive leadership across the industry.
As an appointed advisor by the California Department of Insurance, SLACAL oversees a $20+ billion market and acts as a crucial stabilizer and informant for both regulators and insurance market participants. For access to the full report, "All In on California's Surplus Lines Market," stakeholders can visit www.slaannualreport.com/2025.