Equipping carriers to succeed in the rapidly growing E&S space

News -- 20 April 2023

Author: Jack Ramezzana, Business Engagement Manager, Verisk Specialty Business Solutions

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As the traditional insurance market continues to harden and capacity becomes harder to come by, policyholders are increasingly turning to the nimble and highly specialized excess and surplus (E&S) marketplace for coverages that are either no longer being offered or are being denied in the admitted market.

This growing demand is illustrated by the exceptional growth we are seeing in the E&S space compared to the traditional insurance market. The relative appeal of E&S capacity of course varies depending on geographic location and line of business, however, recent analysis by S&P Global Market Intelligence revealed that total E&S direct written premiums in the U.S., excluding Lloyd's syndicates, increased 27.6% year-on-year during the first six months of 2022 to $37.6 billion. Comparatively, the total U.S. P&C market, excluding E&S premiums, grew by only 8.4% during the same period.

As part of this trend, we are seeing more and more traditional carriers opening up E&S divisions. Policyholders’ past concerns about dealing with E&S carriers have largely subsided, reducing the perceived reputation or business risks for carriers of entering the space. Meanwhile, carriers are finding the flexibility of working in the non-admitted space advantageous. 

However, the E&S market is a unique and fast-moving space. In addition to possessing specialist underwriting capabilities, carriers entering the E&S market must be able to adapt to a range of challenges posed by new entrants, market volatility and disruptive forces including emerging technologies, distribution models and digital ecosystems. So how do carriers equip themselves to thrive in this environment?

Leveraging the technology advantage

Having benefited from hundreds of conversations with prospects, business partners and clients, we hear a consistent message from carriers and MGAs, both large and small; it is essential to leverage technology to maximize efficiencies, automate repeatable processes and meet both internal and external compliance needs.

In the E&S space, carriers often work with multiple trading partners. Ingesting a multitude of data points in a variety of formats can create major challenges if not managed properly. It is therefore vital to establish real-time communication channels with these partners that enable data to flow quickly and consistently throughout the value chain. Transparency, reporting and auditability are also paramount.

And when it comes to underwriting, another message is clear; the ability to turn data into quantifiable, actionable insights to inform decision-making is likely to make or break the success of an E&S underwriting organization. Companies that access data in real-time rather than on lags of weeks or months, enrich that data with third-party overlays and cut through the numbers with analytics and visualizations are carving out tangible competitive advantages and the gap between them and the rest is widening.

Verisk Specialty Business Solutions has a strong track record of delivering successful transformation projects for carriers and MGAs, implementing management solutions designed specifically for delegated authority, commercial and specialty insurance businesses. Our team has a wealth of knowledge in both underwriting and technology in the P&C insurance vertical, with a strong focus on the E&S market, and the US team would be happy to pass on learnings from their extensive hands-on experience.