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Cyber, M&A cover lead surplus lines growth


Cyber, representations and warranties, and marijuana coverages are cited by excess and surplus lines market participants as among promising areas of growth for the sector.

“Cyber continues to expand and challenge us,” said Timothy Turner, Chicago-based president and CEO of R-T Specialty L.L.C., a division of Ryan Specialty Group L.L.C.

And representations and warranties business, including tax liability, “is a very active, growing space,” Mr. Turner said.

“There’s far more” dedicated brokers in this space in the United States and western Europe, said Jeffrey Cowhey, New York-based president and co-founder of Ambridge Partners L.L.C., a transactional insurance managing general underwriter.

Driving the interest, he said, has been an “exceptionally robust” merger and acquisition market and an increased awareness of its existence.

Reps and warranties insurance covers the contractual guarantees made by sellers in connection with corporate mergers and acquisitions.

The private equity industry is “increasingly comfortable” with using the product as a tool to help facilitate closing business transactions, Mr. Cowhey said.

Marijuana is also a growing area for the surplus lines sector, say observers (see related story).

Another focus is construction infrastructure, including bridges, tunnels, dams, stadiums, airports and high-risk projects, Mr. Turner said.

The multiunit housing sector is also a growth area, said Alan Jay Kaufman, chairman, president and CEO of H.W. Kaufman Financial Group Inc. in Farmington Hills, Michigan. It’s “a very difficult market” because “the experience is bad and the rates are low,” he said.

Policyholders with catastrophe-exposed property risks are also searching for capacity, “and there’s big interest in writing it,” he said.

In addition, demand is growing for active-shooter insurance programs, said Mr. Kaufman. “It’s a good product for the public, but with so much capacity out there,” it is being written at rates that are too low, he said.

Another area of interest is sharing economy-related risks, said Drew Johnson, Hartford, Connecticut-based managing director of brokerage solutions at Northfield Insurance, a Travelers Cos. Inc. unit.

An example would be a chef catering in private homes, or a situation where a homeowner leases part of a house for storage. These risks are “really forcing us to think more innovatively,” Mr. Johnson said.


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