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Loss trends across different lines of business are causing some admitted insurers to withdraw from certain risk classes as they try to shore up their portfolios. For some businesses, reopening after the pandemic has made them less attractive under their incumbent insurers’ underwriting guidelines.

For example, many hospitality accounts are still recovering from the financial strain of the pandemic lockdowns, and their lower revenues may make minimum premium thresholds untenable. Other kinds of businesses are experiencing losses due to litigation trends in plaintiff-friendly venues. Still others are facing an increase in property losses from severe convective storm events and fires caused by lithium batteries.

Excess casualty lines in E&S are seeing a bit of competition from admitted insurers, particularly on lower excess layers, which carry larger premiums. Terms and conditions have tightened since the July 1 renewal period, however, with most insurers supporting exclusions relating to per- and polyfluoroalkyl substances (PFAS), also known as “forever chemicals,” and pandemic claims.

When coverage becomes unavailable in the admitted market, buyers and their brokers turn to surplus lines. E&S insurers have an advantage over standard lines companies because surplus lines are exempt from rate and form regulation. That means non-admitted insurers can be flexible and highly creative in structuring coverage, and depending on their appetite, can underwrite accounts with higher risk profiles. These characteristics make the surplus lines marketplace an important source of risk transfer when the admitted market hardens.

Responding to risks

AXA XL’s E&S team is responding to challenging risks in several ways, including:

• Offering coverage to new risk classes. Our E&S Property insurance team has increased its appetite for more generalist classes of business, non-frame habitational accounts, and high-hazard occupancies such as manufacturing.

• Increasing responsiveness with brokers. Fast response times are always helpful in surplus lines, because there usually is an urgency to filling insurance programs. AXA XL’s E&S team knows that quick answer to a wholesaler’s inquiry and an explanation of why can enable our distribution channel partners to be more efficient in their coverage search – even if we have to decline to underwrite a piece of business.

• Remaining open-minded. We are willing to look at emerging risks and get creative on tougher classes of risk. Although we’re selective about the risks we accept, AXA XL’s E&S team has a broad appetite and we like to find solutions. It’s part of our culture.

• Paying claims promptly. As a company, AXA XL is committed to delivering on the promises we make in our policies. In addition to paying undisputed claims promptly, our dedicated internal claims teams talk to each other. They are aware of how different lines of business can be involved in claims, and they collaborate to make the process go smoothly.

• Boosting our efficiency. We are focused on improving our workflow so our E&S underwriters can conduct more business. Keeping up with the volume of submissions for E&S primary and excess coverage is actually quite a challenge. Work/life balance is important, and we encourage our hard-working employees to take time for themselves to avoid burnout.

AXA XL has a strong team in E&S insurance. Our company was born out of a market crisis in the mid-1980s, when casualty insurance essentially became unavailable. We have grown to become a global insurance leader in property and casualty lines, with extensive expertise and financial strength. What has made us successful through all this time, however, is our philosophy of being a risk management partner, not simply a payer of claims. Click here to learn more about how our E&S team delivers creative solutions.

Laura Johnson is the head of E&S Primary Casualty business for AXA XL, overseeing non-admitted lines of business including products liability and general liability. Christopher Lee is the head of E&S Property business, with responsibility for underwriting management of AXA XL’s book of non-admitted property insurance. Kimberly Smid is Chief Underwriting Officer of Excess Casualty & Head of E&S Excess, a portfolio that includes non-admitted general liability, railroad liability, and umbrella.