ATLANTA — Boosted by a strong economy, a healthy excess and surplus lines market is thriving despite intense competition and continued standard market encroachment into the sector, said attendees at last week’s Wholesale & Specialty Insurance Association’s Annual Marketplace in Atlanta.

The industry is robust and will remain so, said WSIA President Jacqueline M. Schaendorf.

“Interest rates may drive up costs a little, but I don’t see that as being significant over the next couple of years,” said Ms. Schaendorf, who is president and CEO of Atlanta-based Insurance House Inc., a managing general agency and wholesale insurance broker.

Many experts pointed to a recent report by A.M. Best Co. Inc. that said the surplus lines market grew 5.8% in direct written premiums in 2017.

The sector has had a “fundamental ability to withstand competitive market conditions with tough catastrophe years and still maintain very solid balance sheet strength,” David S. Blades, a senior industry analyst for Oldwick, New Jersey-based Best who co-wrote the report, said at the conference.

“There’s nothing really unusual about the market,” said John G. Clarke, senior vice president of marketing for Richmond, Virginia-based James River Insurance Co.

“There’s not one thing that’s moving things up or down. It’s just competitive,” he said. “There’s no shortage of opportunities, there’s no shortage of people trying to chase” the business.

“We’re actually seeing a good trend on rates, where each quarter we’ve been getting more and more rates, and I think that’s going to continue,” said Grace Meek, senior vice president of U.S. programs for Allied World Assurance Co. in New York. “It’s single digit, but each quarter is a little bit more than the last.”

Meanwhile, observers were uncertain about Hurricane Florence’s ultimate impact on the E&S market.

“It’s still occurring, and we don’t have solid information” on any specifics, said Ed Mazman, Boston-based executive vice president of the U.S. property unit of Ironshore Insurance Ltd., a unit of Liberty Mutual Insurance Co.

Some observers said while Florence generated largely personal losses, the California wildfires has had some commercial lines impact.

“The amount of exposure to wildfire-prone areas has grown dramatically” because of a combination of more extreme weather conditions and more building in these areas, said Jimmy DeCicco, account executive for North America insurance with catastrophe modeler Risk Management Solutions Inc. in Hoboken, New Jersey.

“The wildfires have created a hard market for utilities,” including “anyone who’s running transmission lines, cell towers or charged with mitigating and abating vegetation and foliage,” said John Edack, San Francisco-based senior executive vice president of E&S casualty for Arch Capital Group Ltd.’s U.S. insurance group.

Observers say with the economy booming, construction risks are attracting more attention.

“If you look around the room, most of the marine presence here at WSIA is focused on inland marine,” including construction risks, said Richard P. Soja, New York-based North American regional head of marine and global head of inland marine for Allianz Global Corporate & Specialty SE.

“There’s a lot of conversations about cyber,” said Bryan Sanders, president of U.S. insurance for Richmond, Virginia-based Markel Corp. “It seems that monthly, there’s new developments in the cyber offerings, so that is an ever-evolving product.”

Referring to New York construction business, Rick Struzzieri, Jericho, New York-based managing director for ARC Excess & Surplus LLC’s property/casualty division, said, “A lot of the standard markets have not renewed that business because of the loss development, and the opportunities are ripe in the marketplace, particularly in the Tristate area (of New York, Connecticut and New Jersey), for E&S underwriters to pick up that business.”

The New York contractor business is “very robust” with the current building craze, said Rory Cline, president of Ethos Specialty Insurance Services, Bermuda-based Ascot Group Ltd.’s U.S. managing general underwriting platform. “At the same time, we know that it won’t last forever, and we have the ability to scale down.”

Marcel Ricciardelli, Philadelphia-based senior vice president of the casualty-environmental and engineering division at Allied World Assurance Co. (U.S.) Inc., said construction has helped drive growth in the environmental area.

Project financiers and developers “want to be protected from environmental liabilities.” Another area of concern is potential mold and Legionnaire’s disease liability, he said.

Also discussed was the continued merger and acquisition activity in the E&S market, including in the managing general agency area.

Joe Morello, New York-based head of E&S property with Beazley PLC, said there will be some M&A activity in the excess and surplus lines sector, but not because there are opportunities. “There’s going to be more because they are a case of survival,” with companies merging because of the greater efficiencies they create.

M&A activity will continue, but not with the same intensity “because there’s been so much consolidation already,” said Alan Jay Kaufman, chairman, president and CEO of H.W. Kaufman Financial Group Inc., the Farmington Hills, Michigan-based parent company of wholesaler and underwriting manager Burns & Wilcox Ltd.

M&A activity benefits policyholders, said Andy Swenson, New York-based head of Zurich wholesale and surplus, a unit of Zurich Insurance Group Ltd.

“For the end customer, you get increasingly sophisticated organizations with an ability to provide greater services, to ease the transactional friction to generate greater efficiencies,” he said.

Another topic of discussion during the conference was Lloyd’s of London.

“There’s a lot of discussion around London and Lloyd’s and their continued evolution,” said James Drinkwater, property/casualty brokerage division president of AmWINS Group Inc. in New York.

“It’s an incredibly important part of E&S distribution, and it’ll be very interesting to see what happens over the next few months with Lloyd’s approving business plans, looking at their strategy and their structure,” he said.

Blockchain technology was the focus of one session at the conference.

It “is a technology that we’re going to have get better at understanding” to see how it can be applied to the industry, said WSIA Vice President Joel Cavaness, president of Rolling Meadows, Illinois-based Risk Placement Services Inc., a unit of Arthur J. Gallagher & Co. Mr. Cavaness will become WSIA president in February.