Nationwide Launches Brokerage Property Unit to Address Surplus Lines Market
Nationwide is set to broaden its presence in the excess and surplus (E&S) market with the establishment of a dedicated Brokerage Property unit, slated to begin operations in the latter half of the year. This strategic move comes as major insurers reassess their exposure in politically charged markets, particularly those grappling with escalating risks.
The new unit will be spearheaded by Tonya Courtney, an industry veteran with over three decades of experience managing commercial property portfolios and cultivating relationships within the wholesale market. Having joined Nationwide in December, Courtney will report to David Nelson, Executive Vice President of E&S wholesale.
Courtney’s prior experience includes four years at Arch, where she served as RVP for the Southeast Region E&S Property, and 11 years at Chubb. The new unit is designed to provide coverage for challenging-to-insure property risks, addressing a gap left by traditional insurers who have reduced their presence in certain high-risk areas.
“Tonya’s vision and proven track record make her the ideal leader to launch this important endeavor,” Nelson stated.
This expansion reflects the growing importance of surplus lines insurance for property owners, particularly in states where major insurers have retreated due to increasing catastrophe risks. States such as California, Florida, and Louisiana have seen traditional insurers exit the market, citing the escalating frequency of hurricanes, wildfires, and other natural disasters that have made coverage financially unsustainable.
With many admitted insurers limiting their exposure, surplus lines carriers have emerged to offer alternative solutions. According to S&P Global Market Intelligence, the share of US property premiums held by surplus lines insurers has grown significantly, from 5% in 2018 to 9% in 2023, with even higher concentrations in disaster-prone states.
The Brokerage Property unit will focus on non-admitted wholesale products tailored to high-risk properties that fall outside standard underwriting guidelines; this includes coverage for commercial properties exposed to extreme weather events or other unique risks.
While Nationwide’s expansion demonstrates confidence in the surplus lines market, it also highlights the broader industry challenges. State-imposed rate regulations in places like California and Florida have made it difficult for admitted insurers to price risk accurately, which has forced many to withdraw. This, in turn, has driven up demand for surplus lines policies, which are not subject to the same regulatory constraints.
Despite their growing role, surplus lines carriers face their own pressures. Some rely heavily on reinsurance, and there are concerns about whether smaller surplus lines insurers have sufficient capital reserves to withstand significant catastrophe losses.
“We’re dealing with a whole new crop of players that aren’t backed by the guaranty fund or a multi-hundred-billion-dollar corporation,” said Doug Heller of the Consumer Federation of America.
State regulators are starting to acknowledge the unsustainable trajectory of the property insurance market. California has introduced new rules allowing insurers to use forward-looking risk models and pass along reinsurance costs, but these changes come with requirements for insurers to provide coverage in high-risk areas. In Florida, policymakers have sought to stabilize Citizens Property Insurance Corp., the state’s insurer of last resort, but it still holds nearly 1 million policies.
As Nationwide moves forward with its E&S Brokerage Property expansion, the company is entering a rapidly evolving market where demand for surplus lines coverage is surging. While surplus lines insurers are fulfilling a critical need, questions persist about their long-term ability to balance affordability and financial sustainability in an era of escalating climate risks.
