Markel's Houser: Problem solving E&S market is the home for emerging risk

By David Bull

June 27 - (The Insurer) – The excess and surplus lines market is uniquely positioned to handle emerging risks, according to Wendy Houser, president of U.S. wholesale and specialty at Markel.

"The E&S market, our market, is a great place to handle emerging risk. We're the industry's problem solvers," said Houser in her keynote address at the E&S Insurer Conference 2025 in New York late last month.

The executive identified three major areas driving business into the E&S channel as she also highlighted new challenges arising from geopolitical tensions and actions by the Trump Administration.

"My topic today is emerging risk, and there are at least three major areas of risk that are driving more business into the E&S channel. They fall under casualty, and property and homeowners," she explained.

Casualty business has seen significant growth, with "submission volume has increased tremendously. Since 2021 the casualty business going into the E&S market is up 55%."

"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.

Property business has experienced even stronger inflows than casualty.

"The property business that's flown into the E&S market is up 84% since 2021," the speaker noted.

"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 represents the third growth area.

"Homeowners premium in the E&S space is up 82% since 2021 and much of it is Cat related," said Houser, highlighting 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 emphasised 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 polarisation 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.

COMBINATION OF SKILLS

The executive emphasised that future industry professionals will need a combination of traditional and new skills.

"When you find a person who has great people skills, risk management skills and tech skills, they're a triple threat, and that's exactly who we should be hiring into the industry," she stated.

Technology, particularly artificial intelligence, will play an increasingly important role in the industry's future.

"Over time the role of the underwriter will be less about process and submissions and even more about relationship learning and problem solving," the speaker concluded.