Markel’s Houser: Excess casualty, property and homeowners driving E&S growth

By Mia MacGregor

May 28 - (The Insurer) - The E&S market is expanding due to emerging risks in excess casualty, property and homeowners insurance, with new challenges arising from geopolitical tensions and actions by the Trump administration, according to Wendy Houser, president of U.S. wholesale and specialty at Markel.

Providing a presentation on underwriting emerging risk at the E&S Insurer Conference in New York, Houser highlighted growing loss trends in the casualty space, particularly excess casualty, driven by social inflation.

"Jury awards are getting bigger and bigger. We've used the term 'nuclear verdicts' for some time, but now 'thermonuclear' is more appropriate given the massive scale. With loss trends we're seeing today, a lot of the admitted market just can't keep up,” she said.

Houser noted that increasing amounts of business being non-renewed and entering the E&S channel creates big opportunities for E&S carriers and brokers.

"Submission volume has increased tremendously since 2021, with the casualty business flowing into the E&S market at 55%," she explained.

Regarding property insurance, Houser observed that the inflow into the E&S market has been strong, with property business increasing by 84% since 2021.

"Although trends suggest rates might soften, they should not because of all the uncertainty out there. Climate change and catastrophe risks present unknowns, necessitating changes in terms and conditions and rate increases, even though the market may not be bearing that right now," she noted.

Homeowners coverage, particularly related to climate change, is another growing area in the E&S market.

Houser said that premiums in this space have risen by 82% since 2021, mostly related to catastrophe risks such as coastal exposures and the California wildfires.

She explained the capacity challenges, stating, "The appetite of admitted carriers has significantly shrunk. Insuring high-value homes now requires multiple carriers. So the challenge we're seeing now in cat-prone areas is not just about affordability, it's about availability.”

Houser emphasized the societal impact. "Trillions of dollars in mortgages or loans are currently exposed to catastrophe risk. This poses a massive challenge, with potential defaults leading to a financial crisis affecting banks and D&O coverage," she said.

“But the immediate challenge for this is enterprise risk management, and we need to keep a close eye on those trends,” she added.

Additional emerging risks stem from the Trump administration's actions, with polarization of ESG risks. "Companies are retracting disclosures on environmental and diversity policies, potentially leading to lawsuits affecting the professional liability market," Houser warned.

She also said that tariffs can drive up inflation, and “it places us in a position where we may be underpricing our risk for both our first party and third party lines.”

“We also need to think about geopolitical risks, such as exposures around war and cyber, as well as social unrest,” she added.

To manage these risks, Houser pointed to digitizing submissions in the underwriting process as a key opportunity.

"Digitization can lead to efficiency gains, increased accuracy in risk assessment, and faster response times. AI tools can streamline data review and help underwriters focus on high-value tasks like more precise risk selection," she said.