Stamping Fee Analysis
Summary:
The second quarter of 2022 (Fiscal Year, Mar-May) resulted in some unexpected and exceptional numbers. To start off, Q2 premium was 39% higher than Q1 this year. The biggest quarter-over-quarter difference ever seen in the last 20 years. Because of this spike, it has significantly moved the overall estimated premium from various models to approximately $16.8B for FY 2022 with expected revenue of $42M. If this occurred, it would result in a 27% increase over the previous fiscal year.
Because of the substantial second-quarter results, the first half of the fiscal year 2022 is also substantially higher than the same period last year. Mid-year premium resulted in $8.1B in received premium and $20.2M in revenue. This represents a 38% increase over the first half of FY 2021. It is worth noting that despite an exceptionally high April month, May and subsequent months are trending towards seasonal averages, not declining as could be expected given current events.
In drill-down analyses, specifically for industry segments and coverages, we saw some interesting behaviors. Insureds’ industries that are notable are Arts/Entertainment, Waste Management, and Transportation with 141%, 82%, and 79% growth from the same period last year respectively. Utilities and Oil/Gas/Mining fell to -11% and -29% respectively. The rest of the industries were relatively on par with the overall market average.
Coverage analyses produced similar results. G/L and Excess Liability grew 64% and 38%, respectively – higher than the first half of the prior year. The other coverages remained quite flat from last year.
The sections below illustrate the detailed charts for the overall market, transaction volume, average premium, and industry groups and coverages.
1. Overall Market Data
Total Premium by Effective/Submitted Year (2005-2023) in $M
Transaction Counts by Year (2005-2023)
Average Premium Per Transaction (2005-2023) Adjusted vs. Non-Adjusted for Inflation
2. Industry Sector Performance First Half FY 2022
Premium by High Level NAICS – % Change H1 FY’2021-H1 FY’2022
Average Premium by High Level NAICS – % Change H1 FY’2021-H1 FY’2022
H1 FY’2021 to H1 FY’2022 Premium for Top 90%
| Year/Category | STAMPING FEE RATE | Actual YOY Pct. | ||||
| 2022 | 0.0025 | 0.00225 | 0.002 | 0.0018 | 0.0015 | |
| Estimated Annual Premium: | $16,800,000,000 | $16,800,000,000 | $16,800,000,000 | $16,800,000,000 | $16,800,000,000 | |
| Estimated Annual Revenue: | $42,000,000 | $37,800,000 | $33,600,000 | $30,240,000 | $25,200,000 | |
| Annual Budget: | $23,000,000 | $23,000,000 | $23,000,000 | $23,000,000 | $23,000,000 | |
| Revenue Less Budget: | $19,000,000 | $14,800,000 | $10,600,000 | $7,240,000 | $2,200,000 | |
| Estimated Percent Revenue Over Budget: | 83% | 64% | 46% | 31% | 10% | |
| NOTE: Q2'22 was 39% higher than Q1'22 total premium. | ||||||
| Year/Category | STAMPING FEE RATE | YOY Percent Chg. | ||||
| 2023 | 0.0025 | 0.00225 | 0.002 | 0.0018 | 0.0015 | |
| Estimated Annual Premium: | $18,816,000,000 | $18,816,000,000 | $18,816,000,000 | $18,816,000,000 | $18,816,000,000 | 12% |
| Estimated Annual Revenue**: | $47,040,000 | $42,336,000 | $37,632,000 | $33,868,800 | $28,224,000 | |
| Annual Budget*: | $25,300,000 | $25,300,000 | $25,300,000 | $25,300,000 | $25,300,000 | 10% |
| Revenue Less Budget: | $21,740,000 | $17,036,000 | $12,332,000 | $8,568,800 | $2,924,000 | |
| Estimated Percent Revenue Over Budget: | 86% | 67% | 49% | 34% | 12% | |
| *NOTE1: Assume an 10% increase in annual operating budget in 2023 from 2022 (i.e. 10% over $23M in 2022). **NOTE2: $18.6B is forecast line premium (+12%). NOTE3: We know it takes up to 6-9 months to fully realize new stamping fee rates. Not factored in this analysis. |
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| Year/Category | STAMPING FEE RATE | YOY Percent Chg. | ||||
| 2024 | 0.0025 | 0.00225 | 0.002 | 0.0018 | 0.0015 | |
| Estimated Annual Premium: | $21,073,920,000 | $21,073,920,000 | $21,073,920,000 | $21,073,920,000 | $21,073,920,000 | 12% |
| Estimated Annual Revenue**: | $52,684,800 | $47,416,320 | $42,147,840 | $37,933,056 | $31,610,880 | |
| Annual Budget*: | $27,830,000 | $27,830,000 | $27,830,000 | $27,830,000 | $27,830,000 | 10% |
| Revenue Less Budget: | $24,854,800 | $19,586,320 | $14,317,840 | $10,103,056 | $3,780,880 | |
| Estimated Percent Revenue Over Budget: | 89% | 70% | 51% | 36% | 14% | |
| *NOTE1: Assume an 10% increase in annual operating budget in 2024 from 2023 (i.e. 10% over $25.3M in 2023). **NOTE2: $21.6B is forecast line premium (+16%). $25B in 2025 (16%). NOTE3: We know it takes up to 6-9 months to fully realize new stamping fee rates. Not factored in this analysis. |
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| Year/Category | STAMPING FEE RATE | YOY Percent Chg. | ||||
| 2025 | 0.0025 | 0.00225 | 0.002 | 0.0018 | 0.0015 | |
| Estimated Annual Premium: | $24,445,747,200 | $24,445,747,200 | $24,445,747,200 | $24,445,747,200 | $24,445,747,200 | 16% |
| Estimated Annual Revenue: | $61,114,368 | $55,002,931 | $48,891,494 | $44,002,345 | $36,668,621 | |
| Annual Budget: | $27,340,280 | $27,340,280 | $27,340,280 | $27,340,280 | $27,340,280 | 10% |
| Revenue Less Budget: | $33,774,088 | $27,662,651 | $21,551,214 | $16,662,065 | $9,328,341 | |
| Estimated Percent Revenue Over Budget: | 124% | 101% | 79% | 61% | 34% | |
Possible Investment Balance By Stamping Fee Rate ($M)
| HISTORICAL YOY PREMIUM DURING RECESSION YEARS |
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| Registered Year | Total Premium By Year | Percentage Change | Amount Based on $25M Budget |
| 2006 | $6,025,150,258 | N/A | N/A |
| 2007 | $5,863,947,600 | -3% | -$750,000 |
| 2008 | $5,723,484,944 | -2% | -$500,000 |
| 2009 | $4,631,335,001 | -19% | -$4,750,000 |
| 2010 | $4,190,113,625 | -10% | -$2,500,000 |
| 2011 | $4,326,278,096 | 3% | $750,000 |
| 2012 | $4,843,118,257 | 12% | $3,000,000 |