As we recently reported in Law360, the surplus lines industry is increasingly serving as a mechanism to provide evolving and complex coverage to new ideas and products throughout the world. This week, Insurance Business America (“IBA”) explored other innovations and legislative changes that may provide opportunities for surplus lines insurers to provide coverage.
In particular, the evolution of drone technology is raising questions worldwide as to both regulation and classification of risk. It is not yet clearly understood if drone coverage would be provided under a personal lines product (which may affect the ability to procure such coverage on a surplus lines basis in some jurisdictions) or if it would be treated as an aviation product. What is clear is that, with new and improved drones hitting the market on an almost daily basis, the nuances associated with the underwriting of such risk present challenges that are well suited for the surplus lines industry.
IBA also notes how the explosion of new businesses in the so-called “shared economy” has brought about new questions as to how to insure certain “shared products.” For example, mobile car services such as Uber, present unique challenges with regard to insuring the risk of the platform, the driver, as well as the passenger. With respect to these issues, IBA believes that “[w]ith freedom of rate and form, [surplus lines insurers] are often the first to blaze trails for new business models and have a keen eye for what’s on the horizon.”
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