RT Specialty’s McCormack: No slowdown in E&S market momentum
There is no sign of a slowdown in the momentum that has driven double-digit E&S market growth in each of the last five years, according to RT Specialty president Ed McCormack.
Speaking to The Insurer TV on the sidelines of the WSIA Annual Marketplace 2023, the executive noted that the surplus lines sector has now grown to represent 20 percent of the US commercial lines market by premium volume.
“We don’t see any of the drivers that have caused that to happen changing. The loss environment is tough, we're way beyond just hurricanes and earthquakes now. It's convective storms; it's wildfires; it's macro inflation; it's social inflation.
“There are just so many factors in play that we believe that the flow of business is going to continue to go into a place where there's freedom of rate and form, where creativity and innovation will drive solutions, and for us, that's the E&S marketplace,” said the executive.
McCormack highlighted challenges and opportunities in the E&S property market, which has continued to see a strong inflow of business as admitted carriers have retrenched.
The shift in appetites means that typically where it might have taken two or three carriers to fill a big property placement, now it takes 10 or 15 carriers, as they look to manage limits and leave themselves less exposed amid rising frequency and severity of losses in the cat space.
“One of the benefits we have at Ryan [Specialty] is that we have a lot of expertise on alternative capital, and we can bring that to the table – not just from RT, but many of our related companies within Ryan. So we’re not limited to just traditional carriers. Although that’s always our first stop, we are able to bring in other resources to help,” he said.
McCormack also commented on softening market conditions in the public D&O market, where a dramatic number of new entrants has created competition after a spike in pricing in recent years.
But he noted that several areas of the casualty market remain challenging for brokers to place business.
“Transportation, healthcare, public entity – there’s a lot that remains tough, habitational and higher education too. We expect rates in casualty to stay strong and see no reason to believe that we’re going to turn around and see softening as we have in D&O.
“So those remain challenging places and those are places that we are growing very well,” the executive commented.
Return to work key to creativity and innovation
McCormack was asked about the move by Ryan Specialty to encourage employees to return to the office in the post-pandemic world.
And the executive said the move was important, especially in the E&S market, where creativity and innovation are key to delivering product and solutions to retail broker clients and insureds.
“It’s incumbent on not just us, but the carriers, the other brokers, and kind of everybody in the industry, to really be out there working hard to create those solutions … and [to be] learning, because this business is changing so fast these days.
“This isn’t about just teaching a 22-year-old kid out of college how to write insurance, how to sell insurance … This is about everybody in the chain learning how to operate more efficiently, staying on top of the markets.
“We believe the best place to get that done is face-to-face collaboration. When you’re sitting next to others, sitting next to your bosses, hearing experienced people do deals and just talk about how deals get done, we think that is invaluable for not just our younger people, but across the board,” he continued.
McCormack said there would always be exceptions, with some employees working from home before the pandemic, or having flexible work schedules.