E&S Coverage: No Longer Niche
Once viewed as suitable coverage for niche, complex, or high-risk scenarios, excess and surplus line (E&S) coverage is becoming the new standard choice for businesses and individuals alike. Macroeconomic challenges put a damper on performance of MGAs/MGUs, and retail insurance agencies performance, but 2024 was exceptional for wholesalers. Driven by increased catastrophic events and escalating settlement costs, which heightened liability claims and underwriting volatility, the E&S insurance market reached over $81 billion in 2024—a notable 12% growth. According to a recent Conning report, the market has expanded at an annual growth rate of 21% over the past five years, surpassing $104 billion in premiums by 2023.
Several factors are driving this increased interest, primarily the need for the insurance sector to navigate a less predictable risk environment. Traditional insurers operating within admitted lines are often constrained by strict state regulations, making it challenging to offer coverage for high-risk situations. Natural disasters, especially in vulnerable states like Florida or California, have made affordable traditional coverage difficult to obtain. Furthermore, the rising occurrence of rare, severe events, like pandemics or cyberattacks, has made insurers more cautious.
E&S insurance offers the flexibility needed to address these unique challenges. Operating with fewer regulatory limitations, E&S insurers can create custom policies that traditional insurers cannot. For instance, businesses in wildfire or hurricane-prone areas often find comprehensive, affordable coverage more accessible through E&S providers. Additionally, E&S policies are increasingly used to explore coverage for emerging threats such as cyber risks, cannabis businesses, and intellectual property disputes, giving insurers a competitive edge without regulatory constraints.
High Risks, Higher Service Expectations
Success in the wholesale insurance market depends on efficiently managing complex policies while maintaining strong relationships with both retail agents and carriers. As E&S becomes more mainstream, wholesalers must elevate their service quality to meet heightened service expectations. Policyholders dealing with new types of risks want assurance their insurers thoroughly understand and effectively address their unique coverage needs. With expansion into emerging risk areas like cyber and technology, specialized expertise and exceptional service become critical. Policyholders in high-risk categories no longer accept subpar service; they expect efficient digital platforms and proactive communications.
Agents’ perspectives on E&S insurance are changing, too. Previously considered a fallback option, E&S was associated with higher premiums and complicated claims processes. Today, however, agents see the value in the customizable and adaptable nature of E&S coverage, making it attractive even when traditional insurance is available. Agents now expect high service standards from E&S insurers, like those provided by traditional insurers, including responsive customer support, clear pricing, and efficient claims handling.
As policy volumes grow and coverage complexity increases, manual policy checking processes are becoming unsustainable. Today’s wholesaler brokers handle an increasingly complex array of policies while serving as the crucial link between retail agents and carriers. Teams must maintain impeccable accuracy while processing high volumes of sophisticated policies—all while meeting tight deadlines and managing relationships on both sides of the transaction. Continuing with traditional manual policy checking processes carries significant risks for wholesale operations:
- Revenue loss from delayed policy processing and binding
- Increased overhead costs from inefficient resource allocation
- Higher E&O exposure and potential premium increases
- Lost business opportunities due to processing bottlenecks
- Diminished competitive advantage in a technology-driven market
- Strained relationships with retail partners due to processing delays
- Reduced capacity to take on new business opportunities
- Limited ability to scale operations efficiently
- Inconsistent processing standards across different teams
- Growing backlogs during peak periods
- Difficulty managing complex specialty lines effectively
- Challenges in maintaining carrier compliance standards
- Increased pressure on experienced staff handling complex policies
- Reduced capacity for business development activities
- Limited time for strategic relationship management
- Delayed response times to retail agent inquiries
- Potential damage to carrier relationships due to quality issues
- Reduced ability to provide value-added services
- Risk of losing key partnerships to more efficient competitors
Forward-thinking wholesalers recognize that modernizing their policy checking processes is not merely for operation efficiency, but about preserving valued relationships, protecting market position, and enabling sustainable growth. By investing in advanced AI-powered solutions that enhance accuracy while reducing manual workload, wholesalers can position themselves as true partners to both retail agents and carriers.
Operations Upgrade: Patra’s Policy Checking AI
Maintaining manual policy checking processes isn’t just inefficient—it’s a strategic liability. Automating policy checking with advanced AI technology enables wholesalers to process more business, reduce risk and improve service quality. Patra’s Policy Checking AI offers wholesalers an innovative path to transform policy checking operations.
Wholesale insurance demands sophisticated solutions capable of handling intricate policy structures and specialized coverage forms. Policy Checking AI was designed with this complexity in mind, offering advanced capabilities that ensure thorough review of even the most complicated policies. The system is designed to process all commercial P&C insurance policies using advanced AI technology and comprehensive checklists tailored to specific policy types; enabling wholesalers to process complex risks with confidence and precision.
- Patent-pending AI technology handles sophisticated policy structures
- Comprehensive 900+ point checklist ensures thorough review
- Seamless processing of specialty and surplus lines policies
- Consistent accuracy across all policy types and volumes
Growth in the wholesale market requires solutions that can expand seamlessly with your business while maintaining quality standards. Policy Checking AI provides the scalability needed to handle increasing or fluctuating policy volumes and emerging coverage types. This adaptability ensures that your operations can grow without sacrificing efficiency, quality or processing speed regardless of workload.
- Flexible processing capacity for varying workloads
- Efficient handling of high-volume policy checking
- Quick adaptation to market changes and new policy types
- Standardized workflows ensuring consistent quality
Success in wholesale insurance hinges on maintaining strong relationships with both retail partners and carriers. Policy Checking AI helps strengthen these crucial partnerships by enabling faster, more accurate policy processing and enhanced communication. By streamlining operations, your team can focus more time on nurturing these vital business relationships.
- Faster turnaround times for retail partners
- Improved accuracy for carrier submissions
- Detailed documentation supporting compliance requirements
- More time for strategic partnership development
Choose between full-service solutions with dedicated processing teams or self-service options for in-house control, both backed by Patra’s expertise. Schedule a customized demo of Policy Checking AI to discover the best implementation option for your operations.
The full-service solution includes E&O coverage, providing an additional layer of protection for your wholesale operation.
Conclusion
The rising prominence of E&S insurance signals a new phase in the U.S. insurance industry. The distinction between admitted and non-admitted markets is becoming less clear, resulting in a more integrated and responsive U.S. insurance landscape. As risks continue to evolve, demand for flexible, customized coverage will increase. Wholesalers can successfully capitalize on these emerging opportunities, maximize growth, and strengthen resilience by modernizing policy checking operations. Policy Checking AI offers wholesalers the technology and support needed to scale operations, maintain quality, and strengthen partnerships with both retail agents and carriers.
Eliminate Policy Checking Bottlenecks
Scale policy checking efficiency and deliver the quality your partners expect with Policy Checking AI.
