Corinne Jones, seen below, is executive vice president of Operations at AMWINS Access Redondo Beach, Calif. She says:
First and foremost, the marketplace remains highly competitive. There continues to be price softening on average, but we are seeing isolated hardening in certain segments where there is dislocation. We're beginning to see modest rate increases (in the 5%-10% range) depending on line, loss history and account size. Overall, it is clear that the declines have stopped, but the supply of capital still outweighs demand.
The issue of information management and the rising cost of investing in the right kind of technology remain key challenges, particularly for smaller firms. In the wholesale market, the various opportunities that we have — the new types of risk that come up and that we find ways to write — bring additional challenges, because of the constant investment required to identify those risks, manage that information and put new products out there.
Another challenge that we face as an industry is the need to transact more efficiently in order to lower the cost of insurance to the ultimate insured. We need to establish a more streamlined infrastructure in which the retail broker, the wholesaler and MGA and the carrier all play a part but don't duplicate each other's protocols and procedures. Wholesalers are in a strong position to increase efficiency because we can perform many of the functions currently undertaken by carriers, but true efficiency still requires an integrated approach among all constituents.
In addition, we need to continue to educate retail agents about the benefits of the wholesale distribution system. As recent analysis provided by the Wholesale & Specialty Insurance Association (WSIA) has demonstrated, wholesale distribution does not increase the cost of the transaction to the insured. WSIA's wholesale value campaign is designed to increase awareness of this fact among retail brokers.
We're also seeing that some larger, commercial writers have pulled back in major lines. At the same time, there have been a number of new entrants into the marketplace, particularly in the property space.
Joel Cavaness, at right, is president of Risk Placement Services Inc. in Rolling Meadows, Ill. He says:
The greatest challenge today in our industry is our ability to attract and retain the younger talent that will be essential for the future growth of our industry. We have to provide training, challenges, opportunities and career growth in a way that meets the expectations of these young people while satisfying the business needs.
The second biggest challenge is continuing to find ways to provide valuable services and products when the expectation from many of our customers is that they continue to get paid increasingly more. We will be in a constant battle to balance the desires of our customers in making more while continuing to provide the first-class service and products that our industry provides.
I would expect over the next short period that new advances in technology, medicine, drug development, genetic advances and others will provide our industry the opportunity to be at the forefront of handling many of these unique needs for protection.
Jacque Schaendorf 
is president & CEO Insurance House in Atlanta. She says:
Pricing will continue to be a top challenge. Even with a very significant weather event year in 2017 with estimates of over $100 billion in insured losses from hurricanes and wildfires, there is still a substantial amount of excess capital in the industry. While there may be some level of pricing adjustments on the property side in the usual areas where large weather events typically occur, generally pricing will remain relatively flat over most lines of business — so the industry will be working hard to maintain accounts and grow organically.
One emerging challenge that the E&S industry should be monitoring is legal advertising, primarily targeting commercial trucking firms and businesses that have a need for General Liability. These firms typically carry coverage limits of $1 million and more. Legal advertising budgets have substantially increased and the practice of where to target this advertising is very sophisticated — especially using social media to reach the targeted audience. The potential for increasing loss costs based on this activity will further challenge pricing levels.
Patrick Albrecht is senior vice president of Business Development at Associated Insurance Administrators Inc. in Montgomery, Ala. He says:
In a highly competitive market where capital is abundant, the E&S industry must continuously seek out opportunities to distinguish itself from standard insurance providers.
Many product lines that were once easily recognizable as E&S lines have become blurred and can often be found in both the admitted and non-admitted marketplace. With product lines less of a factor, the E&S industry must look to distribution, emerging coverage and pricing flexibility as keys to continued success.
Based on observations in the Southeast Region, the Commercial Auto and Transportation sector continues to present the highest demand in Surplus Lines this year. With demand should come the opportunity for adequate rate and subsequent profitability for E&S carriers. However, underwriting expertise is essential to realizing this opportunity, and unfortunately many carriers have concerns that the distribution channels can provide an adequate level of expertise. As such, it has become more difficult to obtain binding authority for these lines and limited the retail agency access points for this coverage.
Kathy Schroeder is president and CEO of Sierra Specialty Ins. Services Inc. in Clovis, Calif. She says:
With half of the Insurance Industry workforce set to retire in the next 10 years, how are we to get the work done? Some choose to outsource servicing jobs. This is done for financial and training reasons. Some companies are starting to provide internships and are actively recruiting at universities with Risk Management programs, young people that are driven and will put their careers first. Baby boomers understand this type of person. We are trying a third track.
What if we hire people that want a work/life balance, people that care passionately about their customers and careers but also want to be available to their families? We ask each employee to do an annual review of our company, and this is when they set their career path. This includes what they need to have a well-rounded life. This is where they tell me they are ready to travel, or study or do whatever is needed to move up the ladder.
We also look to people outside our industry to hire. If people have the right work ethic and attitude they can be trained. We look for people that are committed to our community.
Brenda Austenfeld is president of National Property Practice at RT Specialty in Kansas City, Mo. She says:
The single greatest challenge within E&S is technology for small business aggregation. The E&S industry is catching up in this movement, and the clients — insureds and retailer brokers — are anxious to consolidate if and when our industry is ready with much opportunity ahead.
Creative solutions from E&S professionals continue to expand and enhance the E&S arena with growth throughout. Key opportunities for our sector of the industry include major growth areas such as Small Business/Binding Aggregation and Expansion; Catastrophe Property; Construction; Professional Liability; and Transportation.
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