Historically, specialty insurance has operated in the domain of excess and surplus lines. The E&S or non-admitted market exists to serve risks that are non-standard, unique, or for which admitted market insurers have not established policy forms or rates, or those that require more capacity than is available from admitted insurers.

More of those sorts of risks are prevalent today, and businesses are seeking coverage for them. An advantage of the specialty lines market over the standard lines market is the ability of specialty companies to introduce new products quickly. Demand for new risk solutions has driven steady growth in specialty lines, and that does not appear as though it will slow down anytime in the foreseeable future.

Choosing a specialty lines partner

As the risk landscape continues to pose challenges, it’s more important than ever to work with qualified specialty lines insurance partners. Characteristics that make a strong specialty lines insurer include:

• Expertise. Deep knowledge and technical expertise in underwriting as well as claims should be core considerations when selecting a specialty lines insurer.
  
  Specialty lines insurers that have a longer history of writing business typically have acquired more knowledge of the industries they serve and therefore are in a better position to understand how shifts in the risk landscape affect their policyholders. Munich Re Specialty is part of a global organization that has underwritten risk for more than 140 years. We know a lot about different risks because we’ve seen a lot of them in that time.
• Stability. Financial stability and a strong balance sheet have always been critical when choosing an insurer. The surplus lines market has had six straight years of favorable underwriting results through 2023.
  
  Choosing a specialty lines partner that can do business in all kinds of market conditions and be around for the long term is a smart move.
• Partnerships. A good specialty lines insurer is committed to its relationships with brokers and customers, and it believes in the power of partnership. Munich Re Specialty seeks to be a trusted advisor to our customers and distribution channel partners. We can respond with the nimbleness of a boutique firm but deliver the insights of a global organization.

Bring it all together

An insurer’s canvas for creativity tends to be bigger when it doesn’t have the same constraints that an admitted market insurer does. Specialty lines insurers can be more creative in their approach to certain risks because the non-admitted market is not limited to specific form and rate filings.

For this reason, Munich Re Specialty can take a more flexible approach to underwriting submissions. Instead of a “no,” our decision to underwrite a specialty risk often focuses more on “how.” Our teams think outside the box to find solutions. We bring a global network of insurance experts, unified in providing seamless solutions to navigate today's dynamic specialty insurance landscape.

An example of this is our recent non-admitted FAIR Plan Commercial Wrap product, which meets the needs of customers and brokers for hard-to-place property risks. This new protection is designed as a companion policy to the California FAIR Plan and offers difference-in-conditions coverage to commercial property owners. The FAIR Plan Commercial Wrap from Munich Re Specialty provides supplemental capacity beyond what the FAIR Plan offers, and it bridges the gap between the FAIR Plan and special form-based commercial property insurance.

This article was produced by Business Insurance, in collaboration with Munich Re Specialty – North America.