P&C the September 2023 issue

Serving Evolving Risks with E&S Flexibility

Q&A with Bryan Salvatore, Executive Vice President, President, Specialty, The Hanover
Sponsored by The Hanover Posted on August 30, 2023

Bryan Salvatore, president of specialty at The Hanover, discusses how the flexibility of the E&S market offers an effective way for agents and brokers to address these evolving exposures, enhance the customer experience, and help clients confront emerging risks.

What advantages does the excess and surplus lines market offer for agents, brokers and their clients compared to the traditional market when it comes to finding coverage?

The core proposition of the E&S marketplace is to be able to deliver flexibility and respond to evolving risks for customers.

The market can react quickly to evolving risk characteristics from a variety of factors, including dynamics associated with individual risk, increasing jurisdictional challenges, litigation funding, changing weather patterns, legal system abuse and economic pressures, to name a few. The breadth of product, niche expertise, pricing flexibility, manuscript endorsement capabilities, and ability to restrict or expand capacity allows for this market to serve the unique needs of many businesses.

How do agents and brokers ensure they are meeting their customers’ specific needs?

It’s critical the agent or broker has the proper perspective and context. They need to have the requisite knowledge and experience as well as the necessary familiarity of the market. It’s equally important that the agent or broker digs in and really understands the customers’ needs, exposures and risk tolerance.

It’s crucial the agent or broker can demonstrate this strong knowledge of the customer’s business, has a full appreciation of the customer’s risks, and can deliver a prudent placement. Agents working with the right carriers who help support growth in this area can deliver a valuable insurance solution and an exceptional customer experience.

How can the E&S market help agents and brokers to improve their customers’ experiences?

We are investing more than ever in technology that enhances the agent and broker experience, and we’re seeing the benefits of aggregating data, like being able to communicate ways in which agents and brokers can help their clients protect themselves from the many risks they face. In addition, risk solutions capabilities create value for our agents and customers. While common in the admitted market, many E&S carriers do not employ risk management teams. Demand for these services will increase as client risks continue to grow and the complexity of risk increases, serving as a key differentiator for companies that invest in them.

Investments in technology also enable brokers to interact with multiple carriers, sometimes regarding multiple risks at the same time, and enables them to deliver real value to their customers in a very efficient way.

The E&S market also has been affected by natural catastrophes, inflation and issues stemming from high reinsurance rates. What challenges do you think this could present to brokers looking to find these kinds of solutions for their clients?

No question about it. The marketplace is getting increasingly challenging, with expanding exposures as well as appetite and capacity restrictions, increasing attachment points and increasing rates.

But on the whole, when you take the entirety of the E&S marketplace, there’s a tremendous commitment to finding solutions that work for the customer. Yes, the business is becoming more and more complex, but if agents and brokers know how to navigate the marketplace and truly understand carrier capabilities, they can provide really powerful solutions to the customer. That commitment to creating customized, dependable solutions is what the E&S market is all about.

The first thing we suggest is for agents and brokers to look for carrier partners that bring deep market experience, broad and innovative capabilities, and financial strength to the equation to ensure steady but disciplined growth.

Are there any new or emerging risks you think the E&S market would be particularly well suited to cover or to help mitigate?

It’s important to remember that the E&S marketplace exists to address new and emerging risks. We’ve seen that in the past in employment practices liability (EPL) and the environmental space, as well as the cyber space. Over time, as these risks become more commonplace, you will see some risks move to the admitted market. But the E&S marketplace will always serve emerging risks, providing important coverage to clients.

When I think about areas like professional liability, for example, a certain subset of that market is addressed in the admitted marketplace, but there is still a very large portion in the E&S marketplace. And keep in mind there will always be accounts that have had losses and may not find coverage in the admitted market. The E&S market definitely leans into providing solutions customers may not find in the admitted marketplace.

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