by Pathpoint
Commercial lines agents nationwide are likely familiar with the rapid growth of the Excess & Surplus lines market. The E&S market posted another record high for Gross Written Premium in the U.S. in 2023, with $73 billion written (representing 14% growth over 2022).
These market dynamics are reflected across sectors and states, but many industries are feeling the impact for the first time, including retail and service businesses. Learn everything you need to know about transitioning your retail and services accounts to the E&S market in this article.
What needs coverage?
In the standard or admitted market, main street small businesses – think food stores, hair salons, boutiques – are commonly covered by a Business Owner’s Policy (BOP).
Small businesses have a variety of insurance needs, but the core concerns are property coverage (accounting for the physical building where the business is based) and general liability (accounting for potential bodily injury, property damage, or personal injury sustained due to the business’s operations).
The most analogous coverage in E&S for retail exposures are package policies; but E&S packages are not identical to BOPs.
Admitted coverage options declining
Why is it important to understand how the retail sector is shifting?
Simply put, businesses are moving into E&S in a structural manner – even after hard markets soften, some of these risks will stay in E&S. In high brushfire or hurricane-prone parts of the country, admitted carriers will decline a BOP policy based on the property alone.
An admitted carrier might also decline to cover the general liability for a retail risk for a number of reasons:
- New ventures
- Loss history
- Older buildings
- Rebalancing the risk portfolio away from high hazard exposures like food trucks, nail salons, or convenience stores
What do agents need to know?
Insureds have a number of direct admitted-market solutions, but when their businesses fall into the surplus lines market, they rely on your expertise to secure the coverage they need.
Review these guidelines to ensure you’ve got them covered:
- Examine the core coverages offered. Is the general liability and property offered the same between BOP and package policies? Typically BOPs offer standardized coverages that may be broader than what non-admitted markets offer.
- Remember, professional liability is separate from general liability coverage offered in E&S.
- Don’t forget other necessary endorsements. Common coverages like business interruption, equipment breakdown, or business personal property may not be included automatically in a package policy.
- Work with your wholesaler to understand sublimits and optional coverages to craft a policy that mirrors a traditional BOP as closely as possible.
- As always, the devil is in the details. Review the specific forms to understand what's covered.
Though the transition to E&S can be tricky to navigate, agents who learn the ropes will instill confidence in their clients, carve out a niche, and earn new chances to win business in this expansive sector.
Learn more about Pathpoint’s digital placement solutions and appetite.