Product Family

Wholesalers’ essential criteria for choosing the right partner


As the U.S. commercial insurance market continues to harden, many businesses are seeing challenges in insuring risks. As a result, wholesale brokers are experiencing a dramatic increase in submissions. Given evolving issues like the global pandemic and trends that include social inflation-charged claims settlements and verdicts and more severe weather events, there are few signs of it easing up in the near future.

Across the board, commercial insurance lines – commercial auto, property, Directors & Officers, primary and excess casualty -- are experiencing significant firming. Just consider the Excess and Umbrella markets. According to several recent July 1 market reports, businesses are seeing as much as 30 % rate increases or more for their Excess and Umbrella programs.

And, with carriers pulling back on capacity, there is less available. Some estimate that USD 500 million capacity has exited the market. Once a company could build a tower of coverage upwards of USD 1 billion, now business must tap into more carriers to buy approximately USD 500 million of limits. Lead umbrella carriers would offer up to a USD 25 million in capacity but have since slashed capacity closer to USD 5 million. That means it has gotten more challenging for brokers to build up desired amounts of capacity, often needing to rely on eight or 10 carriers, not the usual four or five.

Wholesalers are stepping up
The capacity crunch. Rising rates. New and emerging risks. Wholesaler brokers excel under these conditions. Wholesalers have long been established as a key point of distribution for specialized insurance products. Their success is evident in their growth, with many wholesalers seeing growth in the high teens over the last couple of years. Some estimate that hundreds of millions of dollars in retail premiums have already moved to the wholesale market. We anticipate there will be plenty more to come.

Wholesalers have done an admirable job to prepare for it. For one, they have made a noticeable investment in talent, not only adding to their teams but providing considerable training to young underwriters. Many of us are impressed with the underwriting talent that wholesale brokerages are cultivating. And this talent and technical expertise is more important than ever in the current environment, especially for long-established Excess & Surplus markets like AXA XL.

While many other markets may look to take more advantage of E&S opportunities, it will not be easy. Just as wholesalers’ technical savvy and underwriting skill is key to the continued success of the E&S insurance market, E&S carriers need to bring a lot to the table too.

Once a company could build a tower of coverage upwards of USD 1 billion, now business must tap into more carriers to buy approximately USD 500 million of limits.

Long-term commitment 
Market firming tends to cause two parallel trends: one is the standard lines market reduces its appetite for certain specialty risks, which find homes in the E&S market; and the other trend is opportunistic companies jumping into E&S business, seeking fast growth and profits.

For example, in its 2020 report on surplus lines insurance, Conning Inc. noted that 18 new surplus lines organizations have formed since 2013. When market conditions shift, as they inevitably will in the future, companies chasing opportunities tend to focus elsewhere. How many newcomers will remain enthusiastic about writing E&S business through inevitable market fluctuations? 

In contrast to opportunists are specialty insurers that are committed to writing E&S risks for the long term, have dedicated claims teams, and possess a deep understanding of the risks and exposures that wholesalers focus on.

Sustained results 
A clear measure of the value that strong E&S companies deliver when they partner with wholesalers is long-term growth and profitability.

Conning’s surplus lines market report identified Indian Harbor Insurance Company, an AXA XL insurance company, among an elite group of top-performing E&S insurers based on our 10 year (2009-2018) weighted average direct combined ratio of 84.6% and direct premium growth (CAGR) of 12.9%. Such results are impossible to sustain for a decade without creating true solutions for wholesalers and their retail clients regardless of market cycles.

Consistent risk appetite
Cyclicality is challenging enough, but it becomes much more difficult for wholesalers and their clients when insurance companies sharply reduce their risk appetites or withdraw altogether from certain classes of business. Recently, several large insurers have done both, forcing wholesalers to scramble to replace capacity and complete excess programs.

A more consistent risk appetite is better for everyone in the E&S value chain ¬– wholesalers, their retail clients, insureds, and insurance companies.

Flexible access
The wholesaler marketplace is diverse, comprising open brokerage, programs and binding authority business. Similarly, a good E&S partner will offer multiple ways to access its products and capacity, both geographically and by channel.

Underwriting expertise
Knowledge gained through experience in writing different classes of specialty business is a distinct advantage for wholesalers, especially when they have difficult-to-place risks. Diverse risks flow into the E&S market, and a strong underwriting partner has a team of specialists with deep understanding of such risks. 

Dedicated claims teams
Specialty risks, whether they involve liability or catastrophe-exposed property, generate claims with complexities that don’t always surface in standard lines. These require specialized handling, and a good E&S partner will have dedicated resources to ensure the best outcomes.

More than just providing capacity and serving as a payer of claims, AXA XL looks forward to continuing to promote our wholesale broker partners’ success and ability to thrive through current and future challenges. Learn more about AXA XL’s Excess and Surplus Lines business here.

About the Authors
Karl Fischbach is the Wholesale, Programs and Binding Authority relationship leader at AXA XL. Before joining AXA XL in 2015, he held leadership roles in product and portfolio management and distribution management at other global insurers. He can be reached at

Doug Legters is senior vice president of Wholesale, Programs and Binding Authority Strategic Partner Development at AXA XL. Before joining AXA XL in 2018, he was managing director at a leading managing general agency and held executive positions responsible for developing niche insurance programs. He can be reached at

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Global Asset Protection Services, LLC, and its affiliates (“AXA XL Risk Consulting”) provides risk assessment reports and other loss prevention services, as requested. This document shall not be construed as indicating the existence or availability under any policy of coverage for any particular type of loss or damage. AXA XL Risk. We specifically disclaim any warranty or representation that compliance with any advice or recommendation in any publication will make a facility or operation safe or healthful, or put it in compliance with any standard, code, law, rule or regulation. Save where expressly agreed in writing, AXA XL Risk Consulting and its related and affiliated companies disclaim all liability for loss or damage suffered by any party arising out of or in connection with this publication, including indirect or consequential loss or damage, howsoever arising. Any party who chooses to rely in any way on the contents of this document does so at their own risk.

US- and Canada-Issued Insurance Policies

In the US, the AXA XL insurance companies are: AXA Insurance Company, Catlin Insurance Company, Inc., Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Specialty Insurance Company and T.H.E. Insurance Company. In Canada, coverages are underwritten by XL Specialty Insurance Company - Canadian Branch and AXA Insurance Company - Canadian branch. Coverages may also be underwritten by Lloyd’s Syndicate #2003. Coverages underwritten by Lloyd’s Syndicate #2003 are placed on behalf of the member of Syndicate #2003 by Catlin Canada Inc. Lloyd’s ratings are independent of AXA XL.
US domiciled insurance policies can be written by the following AXA XL surplus lines insurers: XL Catlin Insurance Company UK Limited, Syndicates managed by Catlin Underwriting Agencies Limited and Indian Harbor Insurance Company. Enquires from US residents should be directed to a local insurance agent or broker permitted to write business in the relevant state.