[00:00] Guest: Surplus lines premium reached $129.8 billion in 2024.

[00:05] Guest: We're in this marketplace halfway through 2026. There are pockets of softening.

[00:10] Guest: The risks that are becoming harder to place are those that have several severity drivers combined.

[00:17] Guest: Just a few weeks ago with the building of Manhattan, we saw how these office conversion projects can cause problems. The hardest part of our business isn't reading applications, it's understanding the story behind the risk.

[00:30] Paul Lucas: Hello everyone, welcome to Insurance Business TV for an E&S Casualty Special with some of the biggest names from across the insurance industry. In this edition, we're going to take a look at how the market is developing, how to win business, what to prioritize, and more.

[00:44] Paul Lucas: And to take us through it all, we welcome an all-star class. First of all, from Sompo, we have Sarah Gunderson. She is EVP of E&S Casualty. From Upland Specialty Insurance, Shanna Sweeney, Senior Vice President of Excess Casualty Liability.

[01:00] Paul Lucas: Representing Westfield Specialty, we have Travis Dean, Vice President of Excess Casualty. And from Holeshore, David Duran, Senior Casualty Broker. And joining us from WSIA, we have Brady Kelly, its CEO and President. And Brady, we're going to start with you. I'd love to get your perspective on where the E&S Casualty market stands today, and indeed, where it is likely headed over the next 12 to 18 months.

[01:25] Guest: Thanks, Carl. Thanks for having us. I appreciate the opportunity. I'm going to let the pros speak more about their feelings on the casualty market. I'll stick to some of the broader E&S market stats that we have.

[01:36] Guest: First, we know that surplus lines premium reached $129.8 billion in 2024, and we've got the 15 states with surplus lines stamping offices that are reporting data, growth of about 8% through 2025. So, we anticipate when A.M. Best publishes their 2025 report here in a couple of months that nationwide premium will range closer to 140 to 141 billion with a continued strong and stable outlook for our E&S segment.

[02:08] We also anticipate continued growth from the stamping offices in their June 30th 2026 report that we're working on now. Specific to casualty lines in 2025, those offices reported growth of just under 12% in non-professional liability coverage as last year. That's the largest E&S line representing about 38% of stamping office premium.

[02:31] And they noted about 5.1% growth in professional liability lines like D&O, E&O, med mal, etc. That being the third largest E&S line at about 9.2% of total surplus lines premium. Those were slightly stronger than the growth rates we saw from '23 to '24.

[02:51] And when you add those lines to the property line, that's about 80% of the E&S market written in those 15 states, all of which grew again in 2025. So, those results continue to reflect our market strength, stability, and ability to provide solutions for complex risks.

[03:09] Paul Lucas: Yeah, it's all sounding very positive indeed. Quite the growing and dynamic space. Would you agree, Sarah?

[03:15] Guest: Absolutely, Paul. I would agree. It continues to grow. We continue at Sompo to see submissions increase year over year to the tune of plus 20%. I would say as we're in this marketplace halfway through 2026, there are pockets of softening, but I think overall we're continuing to see markets maintain underwriting discipline, but we are seeing more competition, and I would say markets lean into the casualty space.

[03:44] Paul Lucas: Yeah, and maybe that's one of the key words, Travis, competition. Would you describe the market as competitive right now?

[03:50] Guest: Yes, I would describe the E&S marketplace as competitive. I think in 2026 we are experiencing a transition from the hard market of 2020 to 2024. I think it's beneficial to talk about what caused the hard market.

[04:06] I think in 2020 to 2024 the retail market became more conservative with both capacity and appetite, which caused a supply deficit with regard to capacity. Which was then filled by both E&S and retail carriers coming into the marketplace, Westfield Specialty being one of them.

[04:27] And this year we are seeing retail and international, both Bermuda and London, become more aggressive, which puts supply and demand towards an equilibrium. Regarding the next 12 to 18 months, I believe we'll continue to see competition on both new and renewal business.

[04:44] But with that being said, I think it is important to remember that loss costs are not going down and underwriting discipline is as important as ever.

[04:51] Paul Lucas: Well, let's zoom in on some of those growth areas if we can. Of course, construction, products, agriculture, premises liability, they keep surfacing as growth areas. Shannon, where are the strongest opportunities would you say right now? And indeed, what's making certain risks perhaps a little bit harder to place?

[05:08] Guest: The strongest opportunities in E&S are generally in those areas where we're already seeing economic activity and growth, or a genuine need for specialized capacity.

[05:17] In the construction sector, there's continued opportunity around infrastructure, civil contractors, specialty trades, and well-controlled projects. The best risks are those that are investing in subcontractor management, contractual risk transfer, fleet controls with telematics. But we're seeing more and more cameras make their way onto job sites, which is certainly helping. And then of course, an overall formal safety program.

[05:50] Now, when we talk about products liability being a growth sector, it remains attractive, especially when we can understand what the product is, its end use, and the supply chain impact. In that same vein, agriculture also creates an opportunity because it encompasses a wide range of operations from growers and processors to distributors, equipment, and even agribusiness or agritainment services.

[06:17] So, that coverage needs to be very specialized, and that's a niche where we're seeing specialization pay off. Now, obviously, premises liability can offer growth, but still, your location, your venue, your occupancy, your alcohol exposure, and your general foot traffic and human exposure is still so critical.

[06:41] So, we're seeing the risks that are becoming harder to place are those that have several severity drivers combined. So, those that are both in an unfavorable jurisdiction with auto exposure or with residential construction and action over claims as a potential, those are the ones that we're seeing harder to place.

[07:06] So, from a carrier perspective, the opportunity for growth isn't just about the segment or the class of business. It's really about identifying the better risk within each segment.

[07:16] Paul Lucas: A great summary there by Shana. Travis, it sounds like there are a lot of sectors with good opportunities right now.

[07:23] Guest: Yes, I believe all the sectors you mentioned have good opportunities, but to piggyback off what Shana said, I think we look at opportunity on an account-by-account basis. As E&S carriers, we need to be opportunistic.

[07:37] When it comes to hard-to-place risks, I think it's the parameter risk or the unknown that plays a big role. For example, in the construction space, we've seen an increase in data center and office conversion projects. Both are relatively new exposures, which means there are unknowns.

[07:56] When it comes to the data centers, I think about pollution, resource consumption, and all the expensive equipment in these facilities. The latter is a good example of a loss exposure where a small roof leak can turn into a large construction defect claim if it causes the equipment to fail.

[08:17] Regarding office conversions, since 2020 and the work-from-home movement, we are starting to see large cities converting unused office space into apartments, condos, and hotels. These projects have a lot of moving pieces from gut demo, adding elevator banks, increased plumbing, adding additional floors.

[08:38] And just a few weeks ago with the building in Manhattan, we saw how these office conversion projects can cause problems.

[08:44] Paul Lucas: So Travis, just to stick with you for a moment, what would you say separates a carrier or a wholesale broker that actually wins complex casualty business today from one that doesn't?

[08:55] Guest: I think it's important to be creative and customize solutions for our clients. I think with the E&S business, we have freedom of rate and form and that allows us to respond to these challenges with creativity.

[09:11] I think finding the right attachment point and pricing is important in staying focused on underwriting discipline.

[09:20] Paul Lucas: Yeah, underwriting discipline. That's a key word, isn't it, Sarah?

[09:23] Guest: It is, absolutely. I agree with Travis. Really, a market that's going to win that complex casualty business is going to find that balance between underwriting expertise and discipline and that creativity that Travis spoke to.

[09:40] Also, I think I want to point out the speed to market and the responsiveness. And let's not forget also the relationship piece of this business, right? That we want to be that first call to our wholesale broker when they see that complex risk come across their desk.

[09:56] Picking up the phone and talking through the risk so that we all have an understanding of where we can come into play and find a potential solution for that client.

[10:06] Paul Lucas: Yeah, and David, I haven't brought you in yet. What's your opinion on those that win business and those that don't?

[10:12] Guest: I think it really comes down to three things: expertise, relationships, and execution. Complex casualty business isn't won by simply having access to markets anymore. It's won by understanding the risk, understanding the exposure, and telling the story behind the risk.

[10:34] Bringing a submission that answers questions for the underwriter. Relationships are a huge part of that. Not because they change the underwriting standards, because they create trust. When a carrier knows you consistently bring quality opportunities and are being transparent about the challenges, they're more willing to invest the time to work through the deal.

[10:58] At the end of the day, the firms that win clearly tell the story of the risk and are able to work through an account.

[11:00] Paul Lucas: One thing that we've seen throughout this discussion so far is that there's increased competition in the market. So, Brady, with more market options available to brokers and insureds today, what qualities beyond simply price and capacity do you think buyers should be prioritizing when they're selecting a wholesale partner?

[11:18] Guest: I would say several, and I will start with expertise. As complex problem solvers, wholesale brokers, MGAs, program administrators, and specialty underwriters offer a very high level of technical expertise to their clients, retail agents, and insurance buyers because they deal in complex risk as their daily profession.

[11:47] I would add access. They have access to the specialty underwriters and markets that are not accessible in the standard market. They know those markets well. As Travis noted, they've got the freedom from rate and form regulation that allows them to customize a solution that fits the needs of that underlying insured.

[12:10] They bring a broad perspective to the buyer, broader perspective on specialty lines of insurance product backed by stable surplus lines insurance companies, strong balance sheets, higher overall financial strength ratings than the standard P&C market.

[12:24] They have real-time knowledge of the market capacity, pricing, risk appetites, coverage terms, and product design. All highly valuable perspective for that buyer.

[12:33] Plenty of value adds from the wholesaler. Yet, I'll wrap up with one more, that being cost. A report conducted by Conning back in 2016 and updated in 2021 confirmed that wholesale distribution does not increase the cost of the transaction for that underlying insured.

[12:52] We anticipate that will be the finding when Conning updates the report later this year as well.

[12:56] Paul Lucas: Okay, a lot of factors brought to bear there by Brady. Sarah, any that stand out for you?

[12:59] Guest: Yeah, absolutely. I think the financial stability is a key piece for buyers to be considering. As again, we mentioned more competition and more entrants and more carriers leaning into the casualty space.

[13:16] I think that longevity of that partnership as you're choosing your insurance carrier, the commitment to the wholesale space. And also, let's not forget the claims piece here, right? The long-tail nature of casualty.

[13:32] You want to, as you're considering what markets you're going to place your business with, look at that claims expertise as well, and the leadership around the claims handling. Because if there's a construction defect claim that comes in in 7 to 10 years, you want to make sure that partner that you chose at that time has that stability that they're going to be there with you to work through that complex claim.

[13:48] Paul Lucas: Yeah, I like that idea. So stability, David, and then a consistency with that as well.

[13:53] Guest: Price and capacity get you in the conversation. Execution is what keeps you there. In today's market, buyers should be asking, when the account gets tough, who's going to actually add value?

[14:05] For me, there are four things that matter. First, technical expertise. Does your wholesaler partner understand the exposure well enough to anticipate the underwriting questions before they become obstacles? Second, market access with credibility.

[14:20] Anyone can say they have markets, but the decision is whether underwriters trust the broker's submission and judgment. Third, responsiveness. Complex placements have tight timelines, and speed only matters if it's paired with accuracy.

[14:36] And finally, advocacy. When there's a coverage issue, a difficult renewal, or a claim, you want a wholesale partner who is willing to push for the best outcome, not simply relay the messages between parties.

[14:50] Paul Lucas: Of course, we can't have any insurance conversations without talking about AI. I'm surprised we've gone this long, to be perfectly honest with you, but it is, of course, reshaping both underwriting and distribution. So, I'd love to get your perspectives on what you think is genuinely useful about AI versus perhaps what is overhyped. And indeed, how's it changing the relationship between retail brokers, wholesalers, and carriers? Sarah, any thoughts on this?

[15:16] Guest: Absolutely. I think from when I think about AI in the insurance space, and particularly in the wholesale space, it can really help with that responsiveness and the speed to market that's so important to this business.

[15:31] With the volume of submissions that we have, being able to prioritize something that comes in and fits within your underwriting appetite. So, that submission goes to the top of an underwriter's desk. And also, let's not forget the data analytics piece from an AI standpoint as well.

[15:48] I think there's a lot there, but I don't see a risk not touching an underwriter's desk. That's not going to go away, right? We need that underwriting expertise, but there is a lot that we can do from an efficiency standpoint to again focus on that speed to market that's so important to the wholesale space.

[16:06] Paul Lucas: Yeah, and that's an important point as well, isn't it, Travis? AI has had a massive impact on the underwriting process.

[16:12] Guest: Yes, I think AI is here to stay. I'm not sure it'll impact the relationship between brokers and carriers in the near term, but I do believe that AI is a tool that will help both sides become more efficient.

[16:25] At Westfield Specialty, we are in the early stages of using AI, but it is clear it'll have an impact on our underwriting process. AI will be able to help scan loss runs, create loss summaries, pull large losses out of those loss runs, pull exposures from submissions, compare expiring exposures to current exposures on renewal accounts, and that's kind of just the tip of the iceberg.

[16:52] These functions will help the underwriting process become more efficient and will allow underwriters to look at more deals, which will then help with speed to market and customer service.

[17:05] AI will help carriers be faster to market and provide better service, which I believe is a win for brokers, carriers, and clients alike.

[17:12] Paul Lucas: Yeah, are you seeing these advantages as well, David, with AI?

[17:15] Guest: I think AI is going to eliminate administrative tasks long before it eliminates judgment. That's the distinction people should focus on.

[17:25] So today the biggest wins are submission intake, appetite matching, data extraction. Basically things to save the underwriter's time instead of actually informing them on judgment or underwriting.

[17:41] Where AI is overhyped is the idea that you can underwrite complex casualty risks on their own with AI alone. The hardest part of our business isn't reading applications, it's understanding the story behind the risk, asking the right follow-up questions and making decisions when the information is incomplete. It's still a human process.

[18:01] I actually think AI makes the relationships more important, not less. If everyone has access to similar technology, the differentiator becomes who asked the better questions, who brings better market intelligence, and who can structure a deal appropriately.

[18:15] So I see AI taking the friction out of the process, but definitely not taking the underwriting out of complex business.

[18:24] Paul Lucas: Of course we have a strong retail broker audience watching this. So I'd love to get your opinions on what those brokers can do to build stronger, more placeable submissions. Shannon, what do you wish that you saw more of?

[18:39] Guest: Well, the most placeable submission does three things. It explains the operation clearly, it acknowledges the difficult exposures, and it demonstrates what the insured is doing to control them.

[18:51] What I wish we saw more of was more concise narratives that explain how the company actually makes money, who performs the work, where the work takes place, who those customers are, and what could realistically create a severe loss.

[19:07] Now, loss runs should also come with context. If there is a large claim, explain what happened and what changed and why the same type of event is less likely to happen again. A loss history without a narrative leaves the underwriter to make assumptions and those assumptions are rarely favorable.

[19:29] So, brokers should avoid waiting until the submission is in the market to uncover these major issues. Disclosing the challenges early creates a lot of credibility and it gives the underwriter a chance to help them solve maybe some problems.

[19:45] A strong submission does not try to make the risk look perfect. It gives an underwriter enough information to understand why the risk is manageable.

[19:54] Paul Lucas: Yeah, I like that idea. It's not about making the risk look perfect, David. It's just perhaps explaining why it's a good risk in the first place.

[20:01] Guest: The best submissions tell a story, not just provide data. Underwriters and wholesalers don't need just applications, they need context. And why is the account attractive? What's changed since last year? What makes the insured a better risk than it does look on paper?

[20:21] The other thing I'd encourage is bringing it to us earlier. On complex casualty accounts, don't wait until 3 or 4 days before the renewal. If we have time, we can shape the marketing strategy, identify the right carriers, address potential pitfalls before they come up and ultimately create competition for an account.

[20:43] At the end of the day, the strongest submissions are complete, transparent, and early. That combination gives us the best chance of meaningful options instead of just shopping for the capacity.

[20:51] Paul Lucas: Of course, one issue that has been threatening to kill the insurance sector at large is the search for new talent. It's an ongoing conversation across wholesale. So, Brady, what's being done to actually build the next generation of casualty professionals and including, of course, greater representation of women in the space?

[21:10] Guest: Well, Paul, you hit on one of the key elements of WSIA's mission, which is to develop and broaden the talent pipeline coming into our market. We do this in several ways.

[21:20] A lot of outreach to colleges and universities across the country. We reach more than 100 RMI programs each year. We're doing student symposiums, career fairs, campus visits, where we put WSIA team members and industry pros in college classrooms to promote the career opportunities in our segment.

[21:43] We reached more than 3,700 students last year alone in those settings. We expanded our outreach significantly through our talent advocacy and engagement foundation. That's now to non-RMI programs, HBCUs, Hispanic-serving institutions, to reach a broader base of students who might not be aware of RMI careers at all.

[22:08] We have an immersive summer internship program for students with and without RMI experience, and also offer a number of scholarships for students pursuing risk management and insurance studies.

[22:20] So, many initiatives focused on incoming talent, but also education programs focused on professionals already working in the industry to support their technical training and professional development needs throughout their career.

[22:33] Specific to your question about representation of women in our space, I've seen a significant shift in gender balance. I'm talking mostly about our events. What I see at events since I joined the association now almost 15 years ago has definitely shifted.

[23:03] We see closer to a 60% male, 40% female, maybe 55-45 even demographic at our events, along with a much lower average age of our attendees.

[23:13] But I know Shana knows this well. She's a volunteer facilitator for our association. I know she's got some more specific stats she can speak to, so I'll leave it to her.

[23:28] Paul Lucas: There you go, Shana. You've had your prompt. You are the woman in insurance, so is that something that you agree with?

[23:34] Guest: You know, it's funny. I started my career a little over 15 years ago. So I was one of those new women in the realm. I didn't come from a college that had a risk management program. I had an internship at Enterprise Rent-A-Car, and a gentleman I had rented a car to four times in one summer offered me a job.

[23:56] So I think we have to be really intentional about showing people that insurance, especially wholesale and E&S and reinsurance, it's a dynamic, meaningful, and intellectually challenging career.

[24:10] And the future of our industry really depends on transferring judgment, not just knowledge. We of course need to preserve technical knowledge as our experienced professionals are retiring.

[24:22] So what that means is we need to do better about creating structured opportunities to transfer judgment and not just procedures to the next generation.

[24:34] And when we look to the question around representation for women, we're actually well represented. By that, I mean we are statistically 60% of the insurance workforce. It's just that less than 25% are represented at the executive officer level.

[24:58] So for women, representation can't stop at recruiting. We need sponsorship. Mentorship is valuable, but sponsorship is what puts someone's name forward for that opportunity to change a career path.

[25:12] There are some really great industry organizations and employee networks that help create relationships outside an individual's company. So, I do encourage women to seek those out. Those relationships help build confidence and production networks and give you access to leadership in a business that still remains highly relationship driven.

[25:33] I often say if we want to like our jobs 15 and 25 years from now or this industry 50 to 100, we have to keep investing in the next generation and it starts with us.

[25:33] Paul Lucas: Yeah, let's end on a positive finish. Great thoughts from everyone indeed. Huge thanks to you all for your time. Clearly, the E&S casualty space will be one to watch.

[25:43] You can keep up of course with the latest market developments at our dedicated E&S channel at Insurance Business America. But until next time, we'll see you right here at Insurance Business TV.

[25:53] [music]