NEW YORK—Excess commercial casualty insurers and brokers have several systemic challenges they must address in order to meet their clients' needs and their own growth objectives in 2012 and beyond, a panel of experts said Tuesday at Advisen Ltd.'s Casualty Insights Conference in New York.

Shifts in the dynamics of global commerce have compounded the task of building comprehensive risk management solutions, panelists said. At the same time, they noted, certain lines of casualty risk have seen claim frequency and severity expand at a feverish pace in recent years, largely without adequate corrective action on the excess industry's part.

“Commercial auto liability continues to grow at a clip that is unprecedented in terms of large losses,” said Chris Kopser, executive vp of casualty risk management at New York-based Chartis Inc. “Especially if you have a large trucking or auto fleet, it's not unusual today to see auto losses penetrate the $30 (million) to $40 million range. There's nothing in the pricing that contemplates those kinds of losses.”

Casualty underwriters—as well as the risk managers they count as clients—also should take note of the rising number of high-value liability judgments and settlements taking place beyond U.S. borders, Mr. Kopser said.

“Where general liability policies are concerned, we're beginning to see U.S.-style litigation being exported to other countries,” Mr. Kopser said. “We're seeing some very large claims overseas, just from a compensatory standpoint. From a market perspective, there needs to be a correction there. We need to get back to the right base pricing.”

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While panelists urged underwriters to re-examine their own coverage limits and rate structures, brokers in the excess casualty space were advised to turn their attentions outward. As firms seek more robust protections from catastrophic losses, excess insurance programs consisting of multiple layers of coverage can generate substantial problems for policyholders if the terms and conditions of those layers are not consistent, panelists said.

Matters can become even more complicated if one or more of those policies are domiciled outside the U.S., panelists said.

“In addition to finding the best markets and the best prices, brokers have to make sure they put together a program that is concurrent,” said Matt Jacobs, a partner at Chicago-based Jenner & Block L.L.P. “In the event of a large loss that does wind up going up your tower of coverage and there’s a dispute over terms, you don’t want to be litigating in the U.S., mediating in Bermuda and going through arbitration in London. You need to look at the whole program, and really take stock of how it would react in the event of a catastrophic loss.”

Some systemic issues within the excess casualty industry already are being addressed, panelists said. For years, an excess underwriter’s “lack of exhaustion” defense often put policyholders in a difficult position, in which settling a claim with an underlying insurer for an amount below their policy limit meant forfeiting their right to submit a claim with any of its higher-tier excess insurers.

“The good news is that the industry has reacted, and there is new language out there. In most umbrella and excess casualty policies, you’ll see language that allows underlying policy limits to be exhausted by the insurer or the insured,” Mr. Jacobs said. “That means that the policyholder can fill any gap between what they paid in a settlement and what their policy limits are.”