For brokers and agents to navigate the market successfully, Brent Winans, vice president of Clear Advantage Risk Management, said it takes plenty of information, and a lot more diligence. “In a soft market, everybody gets sloppy,” he said. “In the hard market, that doesn’t work anymore. You had better come in with good, solid underwriting information that’s updated and explains the situation succinctly and makes a story that’s defensible.”
Brokers also need to be aware of what they are placing. Insureds, Winans says, need to understand all of the ways in which the new coverage is deficient compared to the coverage being replaced. He said brokers are going into detail on deductibles, terms, limits and premiums, but missing out on equally important information. “They don’t say ‘Here are these extraordinarily onerous exclusions that are on the new policy that are exclusions and limitations that you did not have in the old one.’ And what that creates is an E&O situation when the policyholder has a claim, and it is impacted by that new exclusion or limitation.”
A way to avoid such exposure is by becoming that trusted source for clients. Kelly Hafkey, senior sales executive for Izzo Insurance Services, thinks even those risks that are tough to place can be reduced by advising clients to focus “on exposures of the light end of the class.” For security firms, for example, Hafkey said she would advise clients to take on more business with lower risks, such as banks, office buildings and industrial sites instead of focusing on business such as bars and nightclubs.
For brokers looking to place tough risks, Davis Moore, vice chairman of brokerage for Amwins, would like agents to know that the E&S market is a great option. E&S carriers, he said, have an advantage over admitted carriers in handling the tougher accounts.
“Surplus lines insurers are uniquely able to cover hard-to-place risks because, as nonadmitted insurers, they can react to market changes accommodate the unique coverage needs of insureds and often have access to markets not available to retail agents,” Moore said.
“We do have certain advantages in the E&S market,” agreed Joel Cavaness, president of Risk Placement Services. “We can react very quickly to market conditions and the changing needs of customers, and tailor solutions for those needs.”