Market can no longer count on ‘benign’ cat years: Navigators’ Garrison
Uncertainty and the increasing frequency of catastrophe events is leading to robust E&S growth, Michael Garrison, head of wholesale at Navigators, told Inside P&C during the 2023 WSIA Annual Marketplace conference.
“There was a time not too long ago when we thought about cat exposure, where you could anticipate one or two years out of five or so that would be benign and you could do really well,” he said. “We no longer see that.”
For example, he noted that natural catastrophe activity is becoming increasingly severe “much faster than we used to think about hurricanes going from one to four.”
“So, you have that, and then you have a more sophisticated natural catastrophe underwriting environment. We used to only model hurricane and earthquake. Now we model for severe convective storm, wildfire.”
Navigators on wholesale
Meanwhile, in the wholesale space, speed to market is a key metric for Navigators.
“Within [the] wholesale space within that E&S space, it's all speed. So how much more business can we flow through electronic channels, light touch, no touch? That’s a big piece of what we do at Navigators and that’s a huge growth piece there.”
The company’s position in the market has come on in leaps and bounds since its acquisition by The Hartford in 2018, Garrison said.
“Those discussions [at Navigators’ first WSIA post-acquisition] were much different than we have today in terms of the question of our ability to stay connected to the wholesale market,” he said.
Garrison noted the number of recent announcements regarding new E&S ventures, which reflects the established role the market now plays.
“E&S is becoming a ‘necessary to play’ rather than a ‘necessary to win’.”
While volatility in business lines such as D&O has been notable, it’s less of a concern in lines where Navigators has “critical mass,” as it does in construction liability.
“And so, at that critical mass, we have a lot of data, we have a lot of influence on that trend. It's a very complex market, [a] very challenging claims environment. But that keeps the playing field level for us.”
In terms of construction macro trends, Navigators has seen some slowdown in project flow since the end of 2022, possibly due in part to higher interest rates, Garrison added.