P&C

Traditional Risks Require Specialist Approach

Q&A with Russ Johnston, President of Commercial Lines, Excess & Surplus and Specialty Business, Nationwide
Sponsored by Nationwide Posted on December 4, 2023

Nationwide’s Russ Johnston discusses how E&S can help meet insureds’ needs and why the industry should apply the specialization common in the E&S market to standard commercial to adapt to the unique risks emerging today.

Q
How are economic and weather-related factors influencing current market trends? Do you see them driving more business to the E&S markets?
A

The risk landscape continues to evolve and change with greater speed. Today it’s weather and economic trends, tomorrow it could be something else. Regulators in today’s world face a serious challenge: how to make sure that the carriers they regulate stay solvent while also providing for a fair and fully functioning market for consumers. With the risk landscape changing at such a rapid pace over the last 5-10 years, it is clearly driving more business into the E&S market. Some of that business will likely never leave the E&S market. No matter what, our agents, brokers and customers will have unique risks that require specialized solutions.

As a carrier, we are expanding our specialized approach to our standard commercial lines across product, underwriting and claims. Focusing on industry specialization will allow us to meet and serve the market in a very targeted way.

Q
Carriers have pulled out of the property market altogether in places like Florida, resulting in more movement towards E&S to handle this “traditional” risk. Do you think that is healthy for both markets in the long run?
A

As we’ve learned, widespread catastrophic damage related to climate change is now the norm. It’s not a matter of if a severe weather event will happen–it’s a matter of when and where. This makes weather-related insurance needs more complex. E&S carriers understand and are designed to solve complex risks, so they’ve provided more capacity and more customers have moved in that direction.

Along with groups like the Insurance Institute for Business and Home Safety (IBHS), Nationwide has been an advocate for building codes that require construction companies to erect buildings that can withstand stronger weather events. It’s smart, sensible public policy that may allow standard personal and commercial lines carriers to return to these markets.

Q
How can specialization help the industry develop new solutions across the standard commercial and E&S markets?
A
We are very mindful that there are clear lines of delineation between our E&S wholesale and our admitted retail businesses. But as a standard commercial and E&S/specialty carrier, we have the advantage of seeing the entire market to develop packaged solutions that deliver value to our customers across a broad spectrum of products and distribution platforms. For example, Nationwide has significant capabilities in cyber, surety, and management liability solutions that, in today’s world, virtually every middle-market customer requires.
Q
How are you seeing specialization play out for agents and brokers? Are they leaning toward becoming specialized too or relying on carriers to provide that level of deep expertise?
A

Depending on where you are in the distribution universe, specialization shows up differently. In small commercial, specialization is about understanding how your agents deliver solutions to customers and respond to them consistently and quickly. For our distribution partners who focus on middle market and specialty, it’s about having industry expertise throughout your journey: selecting the right products and coverages tailored to your specific needs, improving safety and prevention with loss control, or working with a claim professional who understands your industry.

In our E&S business, it’s about facing off with our wholesalers and addressing complex products liability needs all the way to delivering property solutions in some of the most challenging geographies from a hurricane perspective. While the approach to each line of business may be a little different, we are focused on customers who value protection and service for complex needs, and we’re delivering solutions that leverage our unique breadth.

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