Social inflation limits underwriting types, affecting coverage limits in industries with higher risk for nuclear verdicts. While trends in E&S can change quickly, E&S can adapt swiftly and efficiently to find the right insurance solutions for customers.
Fremont, CA: The E&S market experienced significant growth in 2023, reaching $31 billion in premiums. However, emerging risks include nuclear verdict costs, social inflation, cyber risks, consumer inflation, third-party litigation funding, human trafficking risks, and climate change, which experts predict will persist into 2024.
We've got a few trends affecting the E&S industry for 2024, including those that continue from 2023.
1) Flexibility
Traditional insurance carriers face limitations due to catastrophic events, while E&S coverage can adapt to weather or economic conditions, requiring transparency and customer engagement.
2) Staffing
E&S insurance carriers face challenges hiring and retaining talent due to competition from carriers, wholesalers, and brokers. Specialist underwriters are needed to handle increased submissions and meet future needs. E&S management teams must commit to training, developing, and mentoring their staff to retain talented workers and ensure future success.
3) Capacity
Capacity issues in 2023 and 2024 are expected to persist, affecting the wholesale and E&S markets. New entrants have not significantly impacted the E&S market, while traditional insurance capacity shifts in areas severely affected by natural disasters, opening up E&S coverage.
4) Inflation
Inflation has seriously impacted the insurance industry, with the consumer price index staying steady. This has led carriers to be more cautious and push business to the E&S market, which can better adjust for inflation and financial uncertainty. Due to inflation, underwriters have had difficulty pricing coverage accurately, resulting in higher claim costs and underinsured people. Inflation rates are predicted to drop in 2024, so E&S can adjust rates faster.
5) Social Inflation and Nuclear Verdicts
Social inflation and nuclear verdicts are escalating damages awards, impacting the E&S market in 2024. Courts are clearing cases on hold in 2020, and some lawyers are willing to settle for lower settlements while taking to jury only cases they believe could receive more prominent jury awards. Social inflation limits underwriting types, affecting coverage limits in industries with higher risk for nuclear verdicts. While trends in E&S can change quickly, E&S can adapt swiftly and efficiently to find the right insurance solutions for customers.
