Understanding excess and surplus lines insurance is sometimes complex. It is not one of the most discussed topics in the insurance industry, but it offers a wide range of insight into the industry. Mitchel Zelman, an E&S broker, leader, and mentor in the field, who is passionate about the business, shares his insights into this fast-changing part of the current economy.
Understanding excess and surplus lines insurance
Excess and Surplus (or E&S) is a specific line of insurance products designed to provide businesses with high risks and additional insurance protection not typically covered by the market. In other words, these businesses usually have higher stakes and need more advanced levels of protection. The most common industries this applies include construction, roofing, habitational, coastal property, and transportation.
These are some of the most costly industries to insure and with good reason. Often, a simple accident amounts to significantly high claims, and there is often the risk of catastrophic loss involved. Yet, E&S insurance is critical. For many businesses, the risks without these services would be financially unbearable.
What are emerging risks in insurance?
Emerging risks are those that are growing more frequent or worsening. Managing emerging risks means creating a plan uniquely designed to meet a company’s needs.
Emerging risks are any risk that could develop or is already present but can be hard to put a price tag on. The bottom line is that these risks have a high loss potential. Therefore they need to be carefully considered.
Most often, emerging risks come with uncertainty. It is hard to predict what type of loss will occur, how extensive it could be, or the severity of the claims. It may even be hard to know how likely these risks are or how often they may occur.
Some of today’s emerging risks include:
- Climate change: Though many people may not easily recognize this as a new risk, Mitchel Zelman and his team continue to see increasing claims explicitly related to this area. Without a doubt, catastrophes related to weather have worsened recently, creating more risk for long-term complications.
- Genetic engineering: It’s difficult to understand what could occur when genetic engineering is utilized. In this area, science is so new that it is hard to know what could be expected even by the leaders within those industries. Yet, insurance protections are necessary for companies on the cutting edge of this area of science.
- Artificial intelligence: A relatively newer risk is the unknown involving artificial intelligence. Whether that is in the form of self-driving vehicles or the use of the software and tools in day-to-day operations, what happens, and who is responsible for the outcome of mistakes? Without a doubt, companies must be able to stay on top of liability risks when utilizing artificial intelligence.
There will always be factors unknown, and at the heart of what insurance is, is helping to protect against those unknowns across the board. Yet, in every situation, companies must look at not just what could happen but how expensive a mistake could be and then create a plan to mitigate that financial loss.
Excess and surplus insurance is a critical investment tool for organizations throughout these and other industries facing emerging risks. With the help of comprehensive, well-designed policies, it is possible to keep moving forward without limitation. Mitchel Zelman and his team continue to push clients in that direction – mitigating risk with forward-thinking policies that can help to reduce risk and improve business operations. Emerging risks often change, but insurance policies can be flexible as well.
Leave a Comment