The excess and surplus insurance market is affected by macroeconomic trends, including inflation, supply chain risks, climate change, catastrophes, rising jury awards and the war in Ukraine, all of which could raise its claims costs, observers say. 

The difficult economic environment puts more pressure on underwriters, said David Blades, associate director of the industry research team at Oldwick, New Jersey-based rating agency A.M. Best Co. Inc. 

The outside factors add an additional level of uncertainty and complexity for underwriters who have to recognize patterns and gain other insights to deal with exposures that have limited loss histories, said Matt Dolan, Boston-based president of North America Specialty, a unit of Liberty Mutual Insurance Co. 

“The things that we are concerned about would be where claims costs are going,” and the effect of inflation and rising jury awards and settlements, said Bryan Sanders, president of U.S. insurance for Richmond, Virginia-based Markel Corp. 

“There are fewer and fewer jurisdictions” in the country where jury verdicts and changing laws have not affected the industry’s claims costs, with jury awards in the “mega millions,” said Gary Resman, Atlanta-based vice president, U.S. casualty, for Aspen Insurance Holdings Ltd. 

It is “truly a concern” what happens when the court systems get caught up in their dockets post-pandemic, said Joel Cavaness, president of Rolling Meadows, Illinois-based Risk Placement Services Inc., a unit of Arthur J. Gallagher & Co. 

The conflict in Ukraine is also raising concerns for policyholders and insurers. “At the end of the day, the capital that goes after insurance is global,” and when events such as the war in Ukraine occur, it has a direct impact, said Dave Obenauer, CEO of wholesaler CRC Group in Mendham, New Jersey. 

In addition, the National Oceanic and Atmospheric Administration predicted an above-normal number of hurricanes this year. 

Wildfires are also causing concerns. Fires seem to be starting earlier and proliferating in areas beyond the “usual suspects” of California, Oregon and Washington, which is causing some insurers to pause “and maybe reassess their risk appetite,” Mr. Blades said. 

American International Group Inc., for example, has moved some of its catastrophe-exposed property coverage for wealthy individuals from admitted to nonadmitted paper.