Wholesale broker Risk Placement Services (RPS) said more than 20 new insurance companies and managing general agents have entered the excess and surplus marketplace over the last couple of years — and they may be more aggressive than incumbent insurers.
“In my 30-plus year career, I’ve never seen so many new market entrants come in within a few months of each other,” said Bill Wilkinson, president of the national casualty brokerage at RPS, in the broker’s U.S. Casualty Market Outlook.
Wilkinson said new E&S players do not have legacy issues and may be in a good position to gain accounts as future so-called nuclear verdicts return as a major concern since courts are just revving back to normal following closures from COVID-19.
“Many believe that future nuclear verdicts awards could be higher, putting further financial strain on long-time E&S casualty insurers,” Wilkinson added.
Starting late 2021, RPS said incumbent carriers began losing accounts to the new E&S capacity providers. “Now brokers are the ones driving application displacement in the market, restructuring towers in an effort to reduce pricing increases that incumbent carriers continue to push,” said Adam Mazan, vice president of RPS’ Pacific region.
One RPS broker quoted in the report said he went to the market after an incumbent came back with a significantly high renewal price on an excess umbrella policy. One new market entrant came back with a quote 30% less.
Wilkinson said the new insurers have been cautious with limits, with caps often at $5 million and as low as $1 or $2 million within the lead $5 million. RPS said towers will continue to involve more carriers than a few years ago, with competition improving after $10 million in coverage.
With underwriters stretched by the rise in submissions as accounts shop, Mazan said to “be prepared for underwriting submission bottlenecks.” The accounts that provide the best information to insurers typically get moved to the top of the pile, RPS said, adding that an early renewal process has always been a good strategy but it is more important than ever in 2022.