The excess and surplus (E&S) lines insurance market in the United States is constantly shifting, changing, and evolving to meet emerging market needs. That adaptability is one reason why the E&S marketplace has done so well in recent years, riding a solid growth curve and collecting record levels of premium.
Seeing opportunities to build strong momentum in the E&S market, Munich Re launched Munich Re Specialty Insurance (MRSI) in January 2019, a commercial insurance unit with a directive to offer and deliver specialty property and casualty insurance products and services in North America.
Jill Beggs (pictured) joined MRSI at that point as president of excess and surplus lines, a position she holds to this day. Since then, the E&S unit has launched 10 products, built a team of 35 people, and, as of August 2021, has over $200 million of gross written premium in the marketplace.
“Our E&S business is going really well,” said Beggs. “The market has been very receptive to us, which I’m thankful for. January of 2019 was a good time for us to enter the market. The Munich Re name is familiar, we’re an A+ rated carrier, and we’ve got a good reputation in the market.
“I think the brokers were very pleased to see that we were looking at the primary market holistically and bringing all the capabilities that we have together. We’re working with them strategically at the top level, and bringing not just MRSI capabilities to the table, but all of Munich Re’s capabilities, whatever is needed in a particular instance for a certain broker. That’s played well for us so far.”
The first E&S product that MRSI launched was general liability (GL), but it wasn’t long before the team learned that the GL market “wasn’t as hard as expected,” so MRSI decided to expedite the roll out of an E&S property line of business, which was originally planned for a few years down the road.
“We pivoted very quickly to enter the property market,” Beggs reflected. “We made that decision in 2019, hired a team, and they were able to launch the product in about two and a half months at the beginning of 2020. The E&S market is constantly shifting and constantly changing, so those types of pivots are expected. Property now makes up about half of our book of business.”
In July of 2020, MRSI made a move that perhaps raised some eyebrows in the marketplace, given the context of the COVID-19 pandemic. The group launched an E&S healthcare liability product that caters to senior living facilities at a time when many markets were pulling back out of that space due to the pandemic. MRSI launched the product with a communicable disease exclusion, and has managed to grow that portfolio quickly because of the market disruption in that space.
“We’re seeing that in a lot of different segments,” Beggs told Insurance Business. “There’s a bit of market dislocation, whether it’s a lack of capacity or companies are cutting back or pulling out due to social inflation impacts or the pandemic. There’s also increased frequency and severity of Nat Cat losses, which are pushing claim costs higher, and the costs of labor and materials on the property side are also higher. So, there are profitability issues out in the marketplace, which carriers are reacting to in various ways.
“At MRSI, we have the benefit of being fairly new, so we don’t have the legacy issues that our competitors are struggling with, and we can come in and fill some of those gaps, with a full view of what’s happening in the marketplace.”
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The latest E&S product launched by MRSI is a management liability solution for private companies and non-profit organizations. Launched in August 2021, this is MRSI’s third E&S financial lines product, alongside lawyers’ professional liability and miscellaneous professional liability. Like all of MRSI’s E&S products, the management liability solution was designed to fill a gap and meet a capacity demand for creative solutions in the private D&O and non-profit sectors.
“We now have 10 products out in the marketplace, covering property, GL, excess casualty, professional liability lines, and healthcare. Our next product launch is going to be in the surety space,” said Beggs. “We have hired a leader who is building out our capabilities in surety, and we will launch a product within the next several quarters. Surety is a historically profitable line of business. There have been recent losses in the surety space, and we believe there’s going to be an increased infrastructure spend, so we think the market is advantageous for another carrier at this point.
“Our idea is to continue to launch products where we see a market demand that fits our appetite, and where we think we can achieve risk adequate pricing. We’re definitely in growth mode, but we are very much focused on the bottom line.”
