Anyone who has been in the insurance industry long enough has heard it before: “This market cycle is different.” This time, though, even veteran Excess and Surplus (E&S) Lines professionals believe it might be the case.
A combination of excess capital, much of it from non-traditional sources, and the ability to put data and analytics to better use means the industry can absorb larger losses than ever before. With continuous new entrants trying to get a return for their investors, a competitive market has taken root.
“What I'm telling my folks is this is the new normal,” says Bob Greenebaum, executive vice president, Casualty Practice Group Leader at wholesale broker Swett & Crawford. Speaking to the abundant capital in the marketplace and what that has meant for the ability to withstand larger losses, Greenebaum notes the industry hardly flinched after 2012's Superstorm Sandy—which caused $19.3 billion in insured losses in 2014 dollars. “Sandy didn't even move the needle, and it was a massive loss,” he notes. “Ten years ago, think what something like that would have done. And what it didn't do is probably the biggest example of the 'new normal.'”
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