Nationwide Enters Growing Surplus Lines Market
Nationwide is set to expand its presence in the excess and surplus (E&S) lines market with the launch of a dedicated Brokerage Property unit, signaling a strategic response to shifts in the property insurance industry. The new unit, expected to be operational in the second half of the year, will focus on offering coverage for those hard-to-place property risks that traditional insurers are increasingly avoiding.
The new unit will be led by Tonya Courtney, an industry veteran with over three decades of experience in commercial property portfolio management and wholesale market relationships. Courtney, who joined Nationwide in December, will report to David Nelson, executive vice president of E&S wholesale. Previously, Courtney held a role at Arch, and spent 11 years at Chubb before that.
“Tonya’s vision and proven track record make her the ideal leader to launch this important endeavor,” Nelson said.
Rising Demand for Surplus Lines
The move comes at a time when surplus lines insurance has become crucial. With major insurers withdrawing from states like California, Florida, and Louisiana due to escalating catastrophe risks like hurricanes and wildfires, surplus lines carriers are filling the gap by offering alternatives. These carriers are not subject to the same regulatory restrictions faced by admitted insurers.
According to S&P Global Market Intelligence, the market share held by surplus lines insurers in U.S. property premiums has grown substantially. From 5% in 2018, it rose to 9% in 2023, with even greater concentrations in states prone to natural disasters.
Navigating Industry Challenges
Nationwide’s Brokerage Property unit will focus on non-admitted wholesale products designed for high-risk properties that fall outside of standard underwriting guidelines. This could include commercial properties with exposure to severe weather events or other unique risks.
However, while the expansion reflects confidence in the surplus lines market, it also acknowledges broader industry challenges. State-imposed regulations, particularly in California and Florida, have made it difficult for traditional insurers to accurately price risk. This has forced many to withdraw, intensifying the demand for surplus lines coverage.
Despite their increasing role, surplus lines carriers are facing their own pressures. Some rely heavily on reinsurance, and concerns exist about whether smaller carriers have enough capital reserves to withstand major 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.
Regulatory Responses and Future Outlook
State regulators are becoming aware of the unsustainable trajectory in the property insurance market. California has introduced new rules allowing insurers to utilize forward-looking risk models and pass reinsurance prices to policyholders. However, these changes are coupled with requirements for insurers to provide coverage in high-risk areas.
In Florida, policymakers have worked to stabilize Citizens Property Insurance Corp., the state’s insurer of last resort, although it still holds a substantial number of policies.
As Nationwide advances with its E&S Brokerage Property expansion, it enters a rapidly evolving market where demand for surplus lines coverage is surging. While surplus lines insurers offer much-needed solutions, questions remain about their long-term capacity to balance affordability and financial sustainability in an era of greater climate risks.
