"We write a ton of vacant business. The standards never seem to want that," he said, adding that small umbrellas are also attractive E&S market mainstays right now.

Charles McCloskey Jr., vice president of Metcom Excess--a wholesale brokerage in Ridgefield Park, N.J.--agreed that "there are certain classes of business that are pretty much still best served by the surplus lines market." He cited hard-to-place contractors--particularly those involved in residential construction, or hazardous types of work such as roofing and demolition--among the areas that remain in the E&S market.

While coastal property was far and away the most frequent coverage mentioned by wholesalers as the area that's sticking in the E&S market, they agreed that a lot of other business that gravitated toward E&S writers during the hard market is once again being written by standard companies.

Mr. McCloskey put vanilla-type real estate business, small artisan contractors and commercial auto on his list of accounts being pulled back from the E&S market.

"As a wholesaler, we have to rely first and foremost on our relationships with our retail customers to maintain our books of business, and in many cases grow. And we've also got to look for new opportunities--new lines of business," he advised.

"The biggest challenge this year has been the increased appetite from the standard market, which we understand. The market is cyclical. It's not that we don't expect and plan for it. When it happens, we've got to work harder for our accounts," he said.

"The hit ratio goes down a little bit. The pricing goes down. So, we're actually writing more policies for about the same premium," he said. "We've certainly been down that road before. Most wholesalers will be fine," he predicted.

He reported that Metcom Excess expects to roll out two new programs within the next 60 days, although he declined to provide more details.

"We're picking up some good new markets," he added, noting that new markets propelled his firm into the personal watercraft and personal umbrella markets recently--"just things we haven't been heavily involved with, or involved with at all in the past."

"The biggest challenge that all of us in the E&S business are going to face is how we are going to maintain our revenues--they will be under increasing pressure," according to William Newton, president of Lemac & Associates in Los Angeles.

"We had it pretty easy over the last three years. Now it's going to get tough again," he said, adding that one way to deal with the challenge is to "get more efficient in the way we handle our business...through the use of technology."

"We're not an industry that has embraced technology," he said. "The only part of technology that we have taken on is e-mail. So now we e-mail submissions rather than fax them. Is that really progress?" he asked.

Mr. McCloskey also stressed the benefits of technology. "Part of our storefront now is the Internet--that's really helping on the new-business side," he said, noting that producers can go to Metcom's Web site to retrieve applications, and the site also has some personal lines rating capability.

"We've got to provide the best service in order to maintain business and grow," he said, suggesting that technology is one path to better service.

In Southern California, Mr. Newton noted that some wholesalers are dealing with a challenge beyond competition--the challenge of a slowing residential construction market. "Housing prices are down. Big projects are being put on hold. The inventory of unsold homes continues to grow every year," he said. "So on the casualty side, we not only have to worry about lower prices--we may also have to worry about fewer accounts.

"We have never tied our book of business as closely to the residential market as some competitors," Mr. Newton said, suggesting that diversification into lines such as directors and officers, professional and environmental liability helps to dampen the impact of market changes.

"We will have to be more aggressive in terms of going out and meeting with existing and new retail clients," he stated, emphasizing the firm's reputation for expertise beyond construction.

Mr. Price said Burns & Wilcox is meeting market challenges by focusing on products that tend to remain in the E&S market, and by paying attention to emerging business trends in areas where standard markets are unlikely to compete.

"When you come to things like professional liability, which we do write a lot of, [E&S companies] are probably the strongest providers," Mr. Price said, including health care professional liability as well as D&O and employment practices liability on his list of specialty market coverages. "Standard markets, I think, just don't quite understand the products that well."

He added, "We're trying to expand in this area because we believe there's a great deal of opportunity, particularly in the health care area--mostly in the services [catering] to young-looking people."

Explaining further, he said his firm is placing liability coverage for providers of botox injections, face lifts, electrolysis and cosmetic work done by laser. "All of that stuff is really booming [and creating] a strong market," he said, predicting that standard markets wouldn't move into this territory any time soon.

These professions don't fit into neat underwriting boxes, he said, adding that it is difficult to rate new procedures and new treatments provided with recently designed equipment. "Some of that is difficult to price on a standard basis, but we'll give it a go," he said.

At Arlington/Roe in Indianapolis, Ind., President James Roe has embraced the standard markets by becoming an aggregator for them--a strategy he reports his firm's had in place for a number of years.

No one independent agent in Indiana specializes in high-value homes, for example, representing all the companies the agent might need to place high-net-worth personal lines business. Together, however, retail agents that have relationships with Arlington/Roe command a large volume of this type of business to attract the necessary markets.

"We fit in not only as an aggregator for [these] standard markets, but with the experts we have on staff, we add a level of advice to our agents that they wouldn't otherwise be able to get," he said.

"Some of our largest companies in this organization are standard markets," Mr. Roe reported, noting that his firm has done this since the mid-1990s. Last year, he estimated that one-third of Arlington/Roe's business was done for standard companies.

"We're not just a surplus lines broker," he said, noting that the definition of surplus lines is "becoming more and more vague." Specifically, Mr. Roe--a member of NAPSLO's legislative committee--noted that optional federal charter legislation would give admitted companies freedom of rate and form for some insureds.

"That might eliminate the mechanism of surplus lines, but not the expertise that's needed to write hard-to-place and specialty business," he said. "So, what we focus on is not admitted versus surplus lines. We focus on specialty business" that can be placed either with nonadmitted carriers or admitted carriers with specialty appetites.

Articulating another strategy for his firm, Mr. Roe said, "We're trying...to focus our attention on the buying decision--not the policy or the process mechanism." More directly, he said, "we really like direct bill."

He explained that the direct bill approach "really helps the insured have a relationship with the insurance company, and it takes away the broker involvement in the renewal buying decision--where you have to go out and shop every single year for the lowest price."

He added, "We try to make sure--with the retailer involved--that we get the buyer placed with the right company and the right terms and conditions this year. Then it should be the right terms and conditions for coming years."

"We want to get paid for our information and our advice, not marketing the lowest possible price," he said. "We like direct bill because we can focus our attention on working on new clients that need information and advice."

At Burns & Wilcox, William McCord, senior vice president and director of personal lines, said relationships with retail agents are the key to success in a changing market. "We want to build those strong relationships, because human beings are social animals. We like to work with people we know," he reasoned.

"We've put a lot of attention in the last two or three years on getting our underwriters trained on how to do proper agency calls. We go out and make a lot of visits. We have very high standards for agency visitation," Mr. McCord said.

"We haven't come up with any magic-bullet product that everybody's got to buy," he said. However, he added, "building relationships is very critical. Those relationships, and a marketing focus, have been why we continue to grow," he said, referring to investments his firm has made in e-mail marketing and advertising.

"We're also on a big expansion binge. We'd like to hire as many new producers as we possibly can. By hiring new producers, they're out there building new relationship and driving new business," he said.

Frank Seigel, Northern New Jersey branch manager for Jimcor Agencies in Monvale, emphasized relationships as well. "We are constantly in touch with our brokers and our companies. We consider both to be our partners," he said.

"We try to find out where we can be helpful to our producers, and we take that information to our companies," telling them where they need to be, he said.

For example, he noted that Jimcor recently expanded its homeowners and dwelling policies to include identity theft and sewer back-up coverages, because "our producers told us there was a real need for this in the marketplace. We talked to our London partners, drafted an endorsement that provided a small amount of coverage [for the two exposures], and we're offering that as an option."

Mr. Seigel said a new division at Jimcor, known as Jimcor Select Risk, is also reinforcing ties with retail clients and insurers. The Select Risk team is essentially a group of specialists in property, professional liability and other areas.

"When a broker comes to Jimcor with a particular risk that falls outside the day-to-day binding authority," with something that would have to be handled on a brokerage basis, it is handled by one of the members of the Jimcor Select Risk team, "regardless of where they're located in the system," Mr. Seigel explained.

"Because our systems are tied in and because we're imaged, we can see that business between us and decide which of us is best to handle that--who has the best relationship with a market, who has the most extensive product knowledge--so that we can do the best job that we can for that broker, and the carrier," he said, noting the initiative has been in place for four months.