Ever feel like you’re building a skyscraper with LEGOs instead of steel beams?
That’s what placing excess and surplus (E&S) coverage feels like for a lot of brokers right now. You have a client who needs a massive tower of liability coverage—say, $100 million. A few years ago, you might have made a few calls, secured a big lead umbrella, and then stacked a couple of hefty excess layers on top. Done.
But today? It feels like you’re making dozens of calls, piecing together a puzzle with tiny, mismatched pieces. You’re getting $5 million here, maybe $2 million there. It’s exhausting, and it’s a trend that’s only getting more intense.
This isn’t just in your head. The market has fundamentally shifted. We’re seeing a massive fragmentation of insurance towers, and it’s making everyone’s job harder. Let’s talk about what’s really going on and why it feels like you’re running a marathon just to get to the finish line.
So, What's Actually Happening to the Insurance Tower?
Think of a traditional insurance tower like a Jenga game. At the bottom, you have the primary layer. Right on top of that sits the lead umbrella—a crucial, foundational piece. Then, you stack the big excess layers on top to reach the height you need.
For a long time, those excess layers were big, solid blocks. A carrier might confidently write a $25 million layer. Easy.
Now, those same carriers are getting skittish. They’re looking at that Jenga tower and seeing it wobble. Instead of putting down a big $25 million block, they’re offering a much thinner, $5 million layer. Some are even pulling back to $2.5 million.
This is what we mean by "fragmentation." To build that same $100 million tower, you now need way more blocks from way more carriers. Your skyscraper is being built with bricks instead of entire floors. And you, the broker, are the one who has to source every single brick.
Why Are Carriers Getting So Shy?
It all comes down to risk, and frankly, a bit of fear. And most of that fear is focused on the layer right at the bottom of the excess stack: the lead umbrella.
The lead umbrella policy is the first to get hit after the primary coverage is exhausted. And lately, it’s been getting hit hard.
We’re all seeing the headlines about "nuclear verdicts"—those jaw-dropping, multi-million dollar jury awards that seem to come out of nowhere. Throw in social inflation, where the general cost of claims just keeps rising, and you have a perfect storm.
Here’s the thing: The carriers writing those higher excess layers are watching this happen. They see the lead umbrella policies getting hammered with massive claims, and they start to get nervous. They think, "If the lead layer is getting breached that easily, my layer could be next."
It’s a confidence problem. Their models and historical data don't seem to apply anymore. The risk feels unpredictable, so they react by reducing their exposure. Instead of betting big, they’re making a bunch of smaller, safer bets.
This puts immense pressure on that lead umbrella. It’s become the toughest, most expensive piece of the puzzle to place because it’s on the front lines. And if you can’t get a solid lead umbrella in place, building the rest of the tower becomes nearly impossible.
Your Job Just Got a Lot More Complicated
Let’s be honest, this shift is creating a ton of extra work for brokers. It’s not just about making more phone calls. The entire process has become more complex.
More Layers, More Problems
You’re not just chasing down more carriers; you’re managing more relationships and more paperwork. Each carrier has its own underwriting process, its own terms, and its own pricing. Stitching them all together into a seamless tower that fully protects your client is a massive undertaking.
You might need 10, 15, or even 20 carriers to build a tower that used to take four or five. That’s a huge drain on your time and resources.
The Hunt for Capacity is Real
Finding carriers willing to participate, especially in tougher sectors like commercial auto, construction, or high-risk real estate, is a real challenge. You’re constantly on the hunt for capacity.
And when you do find it, the terms might not be what you hoped for. Carriers are being incredibly selective. They want to see pristine loss runs and robust risk management from your clients. The days of easily placing a tough account are, for now, behind us.
Pricing Becomes a Moving Target
With so many different carriers involved, pricing gets tricky. The lead umbrella is often the most expensive part, but the pricing for the layers above it can vary wildly. One carrier might offer a $5 million layer at one price, while another wants 20% more for the exact same position in the tower.
Your job becomes about more than just finding coverage; it's about finding the right combination of carriers to create a tower that is both stable and cost-effective for your client. It’s a delicate balancing act.
What Can We Do About It?
This isn't an easy market, and there's no magic wand to fix it. But being a top-tier broker right now means being a master strategist.
Here are a few things that are working for us:
- Start Early: The renewal process can't start 60 days out anymore. For complex accounts, you need to be thinking 120 or even 150 days ahead. You need that extra time to tell your client’s story and to knock on all those doors.
- Data is Your Best Friend: Carriers are hungry for data. The more you can provide to make them comfortable with the risk, the better. This means detailed loss information, proactive safety measures, and a clear narrative about why your client is a good bet.
- Lean on Your Relationships: Now more than ever, your relationships with underwriters matter. A trusted underwriter is more likely to listen, be creative, and fight for your client's business.
This market is tough, no doubt about it. Building these fragmented towers requires more patience, more persistence, and more expertise than ever before. It’s a challenging environment, but it’s also where a great broker can truly show their value. By understanding the dynamics at play, you can better navigate the complexities and continue to build the strong, reliable protection your clients depend on—even if you have to do it one brick at a time.
