Sompo’s Gundersen: PFAS forcing middle market into E&S channel

Environmental risks such as PFAS and the concern they are causing admitted carriers is driving smaller businesses and their retail brokers to seek coverage in the E&S market through wholesalers, according to Sara Gundersen, EVP and head of E&S casualty at Sompo.

“Emerging trends like PFAS or microplastics are impacting certain industries, and we could see more middle-market businesses entering the E&S channel as a result,” said Gundersen.

E&S products have historically been reserved for much larger firms, but the cascading impact of PFAS-related exposures and subsequent claims is seeing smaller companies look for coverages in the E&S space.

On November 23, 2023, the US Environmental Protection Agency (EPA) enacted a new regulation under the Toxic Substances Control Act (TSCA) requiring all companies, regardless of size, that manufacture or import PFAS to adhere to strict reporting and recordkeeping requirements

Gundersen added that managing these smaller accounts requires greater operational efficiency to maintain profitability and ensure resources are allocated effectively.

“[When dealing with the middle market], you have to be more efficient, right? And that creates an opportunity for innovation and different technologies that are out there. And that's something that we're actually very focused on,” said Gundersen

“As you continue to see more business flow in and smaller business flow in, you have to be efficient around that, because there's only so many underwriters and staff that you have that can get to those submissions, that can handle that business,” said Gundersen.

Claims handling: Sompo’s competitive advantage in E&S

Gundersen also highlighted Sompo’s claims handling as a unique selling point in the E&S space, attributing its success to the company’s specialised claims team with extensive experience in specific lines of business.

Asked whether claims handling is Sompo’s key differentiator in the E&S market, Gundersen responded:

“That's absolutely right. Our leadership for North America, has brought in claims specialists that are known in the industry, and are really leaders in the marketplace.”

“We've added somebody recently who has spent his entire claims career working on construction claims. To have one individual that can come in and be that internal resource, as well as engage externally with our partners to spread the message of things and different dynamics, is great,” said Gundersen.

Gundersen explained that handling claims in the E&S market differs from the admitted market, particularly due to Sompo’s significant volume of excess business, where collaboration with competitors plays a critical role.

“In the E&S space, we handle a lot of excess business. That means it’s essential to communicate within the tower — understanding who’s below you, what they’re doing. Building rapport with competitors is crucial, as we’re often working together within the same tower to manage claims,” she said.

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