A point of difference in the E&O market

How to find problems in the market and fill those all-important gaps

A point of difference in the E&O market

Professional Risks

By Sam Boyer

Success in insurance, often times, is about creating a point of difference. If your company can offer a product that customers want and which they can’t get elsewhere, that can go an awful long way.

Insurance Business spoke with two NAS Insurance execs about their product business model. NAS Insurance is constantly trying to innovate its products, finding gaps in the market and filling them, often with niche offerings.

Innovative product offerings – particular those associated with the E&O space – are part of “NAS’s overall mission,” said Jeremy Barnett, SVP of marketing. It’s their point of difference.

“NAS has a role in creating products for sort of niches in the industry. And that’s kind of why the surplus and excess lines business exists, so that we can generate some innovative products with a different type of licencing from other departments of insurance,” Barnett said.

“The reason we exist is to be that innovation engine for Lloyd’s in the US. They want to deploy capital into the insurance space that’s not through standard product offerings. Their investment in us is for us to market-sensing, creating products and distributing products that are out ahead of the rest of the business.”

Brian Alva, vice president of underwriting, said the company seeks out new product opportunities in a number of ways.

“You look at gaps in coverage that exist,” he said. “What are standard markets … not picking up or not wanting to pick up, and is there an opportunity to have a specific product that meets the needs of the buyer. Is it something they would buy? And is it something that’s insurable? Because that’s another question, is there a gap there for a reason?”

For specific product opportunities – ones that are financially viable – the company will search out problems in the market through contacts, through the media, and through product development meetings internally.

“A lot of it happens in conversations with our producers or with our insurers,” Alva noted. “Sometimes it can start with a simple question: like, hey, do you have coverage for something like this? And then if it seems like a decent opportunity, we can start the research process.”

Other times, Alva said, “it can just be keeping our nose in the news” and taking note of what new exposures a “big line of professionals may be facing”, and creating a product to cater to that.

And when it comes to timing, NAS will often drop out of a market once offerings they started with have become more standard, Alva said.

“The decision-making that we look at is: when a product is new and there’s not a lot of market for it there is – I don’t want to say it’s a name-your-price kind of game, because you’ve got to meet where people are willing to pay for it – but you’re not necessarily being squeezed by competition,” he explained.

“But as something grows and becomes viable, more and more markets might try and jump into it, at which point you need to be looking not only at that price point between buyer and seller but also now what your competition is doing. And as those margins get squeezed and squeezed, we take a look at … is [the product] as profitable as it once was and does it make sense for us to still be there or … it might be time for us to pull out.”

Related stories:
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Agents selling cyber should revisit their own E&O coverage

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