E&S solutions can help standard carriers continue to serve their clients while reducing their risk exposure. (Credit: Matthias G. Zabanski/Adobe Stock)

As home insurers grapple with severe weather throughout the country, they’re turning more often to E&S solutions for help.

Wildfires, severe convective storms, hurricanes and other natural disasters have increased in recent years, raising the risk for insurers in many regions. Rate hikes have helped stabilize some of the losses, but insurers have also exited some disaster-prone regions entirely.

In a recent Burns & Wilcox webinar, panelists shared how E&S solutions can help standard carriers continue to serve their clients while reducing their risk exposure. Panelist Ian Hanson, associate vice president, personal insurance, said — in California for example — high-end, high-risk properties that used to have one giant policy might now have a FAIR Plan policy, plus separate add-on coverages for things like flood or earthquake.

“Carriers might not be willing to take on that $8 million risk, but they’re willing to take on a portion because that one-shot loss won’t burn anybody’s books,” he said. “Now that you have different carriers and programs willing to participate on the same risk, nobody’s too heavily exposed on one loss, and it keeps the market viable. And on the insured’s side, it gives them options they didn’t have before.”

The panelists pointed to E&S offerings like:

  • Cyber packages: This coverage can offer cyber protection for a household, a growing risk but one not usually covered by standard policies.
  • Flood coverage: Coverage through the National Flood Insurance Program (NFIP) might not be robust enough for many homeowners. “A lot of people don’t realize NFIP is just a really limited coverage option, and our private market offers so many coverages that aren’t available through the NFIP program,” said Kate Wright, associate vice president, personal insurance, with Burns & Wilcox. Private policies can offer loss of use coverage, for example, providing funds for a hotel stay if the home isn’t in livable condition after a flood.
  • Wind deductible buy-back: Offered primarily in coastal regions, the buy-back helps reduce the homeowner’s out-of-pocket expense after wind or hail damage.

E&S products are going to be increasingly important to help standard insurers meet customers’ changing needs, the panelists said. “We are flexible as the market shifts, and we are going to continue to evolve to meet the needs of our clients,” said Berri Willis, associate vice president, managing director at Burns & Wilcox.

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