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By its very nature, the Excess & Surplus (E&S) casualty market attracts risks that cannot otherwise be handled by the primary market. Yet increasing losses in several traditional risk areas, coupled with an emergence of exposures that have yet to fit within traditional lines of coverage, are appearing on the horizon and promising to cause disruption.

Kimberly Smid, head of E&S Excess Casualty, has had the opportunity to see firsthand the changes. Smid has spent over a decade in handling both Fortune 500 companies as well as middle market accounts within the excess casualty space. Smid has a deep background in handling large, complex risk accounts.

Ankur Chokshi, head of E&S Primary Casualty Brokerage and Binding for AXA XL, has seen the evolution of the E&S space from both the retail and wholesale perspective. Chokshi, who has a 20+ year career in the E&S market, says the lesson he’s learned over a career is how to adapt to what the clients need. Chokshi believes a solution-oriented approach is one that best serves customers, wholesale brokers, and insureds.

They discuss the challenges and the disruptions ahead, and how the market can adequately address the disruptions.

Within the E&S space, what are the challenges the market is facing right now?

Chokshi: One of the biggest challenges is a lot of competition coming in from the retail space where there is a lot of capacity right now. That’s been years in the making and it has led to our being more solution-oriented for the tough-to-place risk or the more complex clients as opposed to what was traditionally seen as a transactional type of business.

Smid: I would echo that. There’s a lot of competition, specifically in the excess casualty space. It has been a soft market for so long with a lot of available capacity. Many of the newer entrants to the large complex risk space are starting to pay losses. I think some markets are targeting smaller “middle market” risks and in doing so, are starting to tread into the E&S space. In addition, many retail brokers are trying to keep revenue in house and shying away from the use of wholesale brokers.

Chokshi: To add to that, the one thing we miss is the significant amount of M&A activity that’s happening not just within the wholesale space, but within the retail space, as well. That limits the number of opportunities carriers would typically see in the market.

Why is it becoming so difficult? What is putting pressure on the market?

Smid: In excess, auto exposures have been a consistent loss driver. There is an increased severity in auto claims driven by multiple issues. Distracted driving & increased settlement values combined with rising medical costs & technical advancement. The “standard” $1 million attachment point is no longer adequate. The issues being, the primary market (often) does not support an increased limit and /or the premium change is substantial and not well received. Many claims penetrating into the excess layer are related to auto. It does not discriminate by class of business, vehicle type or venue. Consequently, it is creating challenges for the buyer and carrier.

Any other challenges that are impacting the E&S space?

Smid: The industry has experienced poor loss activity in recent years. Specifically, as it pertains to CAT losses. When you factor the depressed rates of the soft market, it creates a difficult environment for profitable growth.

Chokshi: I would agree. Another thing I see a lot of is there are many carriers going after the same types of accounts. So, competition in the plain vanilla book of business is rank. To compete, you have to diversity yourself and set yourself apart from what’s going on in the industry.

Smid: The market has needed to harden for some time. As much as you hate seeing loss activity, my hope is that it’s going to force the industry to respond with the rate increases necessary for premium adequacy.

How can the insurance industry address that?

Smid: Unfortunately, much of what drives losses is outside of our control. However, I think that with increased use of data and analytics, we are empowered to make more informed underwriting decisions. Investment in the necessary technology to better harness and process the available information is a step in the right direction.

Chokshi: From a primary perspective, what we’re seeing as significant is that those accounts that are more of an opportunity are beginning to become a bit more complex in nature. To Kim’s point, a lot of the retail division has siphoned off the accounts they don’t want. The way we have to stand out is we have to service it better. We must be quicker in our response times. We can set ourselves apart from some of the things we’re seeing in the marketplace to showcase our skill sets and act more of a pay to partner vs the traditional pay to purchase approach, which adds value to the clients solution-based approach to risk management.

...with increased use of data and analytics, we are empowered to make more informed underwriting decisions.

Anything in the market itself that may be an emerging trend or issue?

Smid: We’re seeing more opportunity in the shared economy space. As a society we are moving away from the brick-and-mortar stores and toward online and app-related commerce like Lyft and Uber. The exposure and risk profile of these risks is new and different. For us to succeed, we need to change our perspective and determine the best way to approach these risks and provide a product that addresses their unique needs.

Chokshi: As an industry, we have been very reactive to change historically. We have to start being more proactive. Also, another issue is the talent pool both exiting and entering the industry. There’s a significant gap in knowledge and skill.

How do you continue, with these new, emerging risks coming in, to make sure you have the appropriate talent pool to take care of what’s going on in the future?What do you hope to see in the market ideally?

Chokshi: I would like to see the value of the brand and the carrier really start to show forth in that relationship. We always align it to buying a high-end car versus a run-of-the-mill vehicle; you pay for what you get. It is important that it is not always about the premium, but about the added value you get out of the product you buy. I’d like to see some alignment there.

Smid: I would like to see a greater appreciation for product offering, brand and claims handling. Premium is a large driver for obvious reasons, but I believe that good claims handling can reduce loss costs and over time positively impact premiums.

Chokshi: One of the ways I think it will get there is as we see some consolidation in the marketplace, the value of the right partner is going to start showing forth and be more wholesome to that industry. The strength of the carrier will be able to showcase not just one product line, but the vast array of lines they can bring. It becomes important for insureds to have a relationship with a carrier that can be that trusted, one-stop source for that insured’s insurance solution.


Kimberly Smid is AXA XL’s head of E&S Excess Casualty and can be reached at Ankur Chokshi is head of E&S Primary Casualty Brokerage and Binding for AXA XL. Contact him at


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