Hard Market Reset: AI, E&S, Cyber, and Closing the Protection Gap

How to get ahead of a hard market

Capacity is tight and rate pressure isn't letting up. The edge goes to teams that prepare early, tell a clear risk story, and structure deals that match loss behavior. That's it-no fluff, only execution.

• Start 150-180 days out: clean loss runs, current values, risk improvements, and clear SOVs.
• Segment the book: defend core accounts, grow high-quality targets, and exit chronic underperformers.
• Redesign structures: higher deductibles with aggregates, coinsurance for tough classes, parametric wraps, captives, and E&S where it truly fits.
• Lead with risk control: written commitments, site photos, and a 12-month improvement plan to give underwriters confidence.

Talk tracks brokers can use to explain higher prices

Clients hate surprises more than price. Give them the "why," the "what we can control," and options with trade-offs. Keep it short and visual.

• Cost drivers: reinsurance rate hikes, severe convective storm losses, inflation on repair costs, and litigation trends.
• Local story: your loss experience, peer benchmarking, and the specific improvements we've made this year.
• Options grid: higher retentions, sublimits, schedule credits, parametrics, or E&S-show the math, not just the premium.
• Service promise: faster claims contact, risk engineering cadence, and renewal timelines in writing.

Distribution and underwriting are changing

Underwriters want clean, structured data and a clear thesis. MGAs and E&S will keep growing for tough classes, while standard markets focus on precision. Winners make it easy to say "yes."

• Standardize submissions with consistent ACORDs, APIs where possible, and critical fields filled every time.
• Use third-party data (geospatial, credit proxies, firmographics) to prefill and reduce back-and-forth.
• Build an appetite map for producers so they stop sending mismatched risks.
• Automate low-complexity quotes; reserve underwriter time for large, messy deals.

AI that actually helps (and what to do next)

Skip the buzzwords. Deploy AI where it cuts time, reduces leakage, or improves decisions. Start with small, measurable wins and strong guardrails.

• Underwriting: summarize submissions, extract key fields, flag missing data, and draft referral notes.
• Claims: triage severity, detect fraud patterns, identify subrogation chances, and speed up FNOL notes.
• Risk engineering: virtual site reviews, photo analysis, and prioritized corrective actions.
• Distribution: auto-draft proposals, produce client summaries, and keep CRM notes clean.
• Governance: human-in-the-loop reviews, prompt logging, PII controls, and model performance checks.

If you need a risk lens for AI projects, the NIST AI Risk Management Framework is a solid starting point. Read the framework.

Want hands-on training for your team's workflows? See practical options here: AI courses by job.

Could AI reduce losses?

Yes-if it's tied to prevention and fast action. Think weather alerts tied to property lists, wildfire defensible space tracking, or cyber patch reminders that actually get done.

• Track the impact with hard numbers: claim frequency, time-to-first-contact, indemnity severity, and litigation rate.
• If a tool doesn't move one of those metrics, it's noise.

Cyber: show value, not just premium

Cyber buyers want proof their spend changes outcomes. Give them clarity on risk, controls, and what happens on their worst day.

• Control maturity: map to NIST CSF v2.0, highlight gaps, and tie improvements to pricing and capacity.
• Loss quantification: simple scenarios with downtime, data restoration, and legal costs.
• Readiness: tabletop exercises, vendor risk checks, and an incident response plan that includes contact trees.
• Coverage clarity: exclusions, sublimits, panel requirements-spelled out in plain English with examples.

Should government step in with a cyber backstop? Possibly for systemic events that private markets can't absorb. Until then, write triggers clearly and avoid silent cyber.

Closing protection gaps with E&S-smartly

Protection gaps grow when pricing, capacity, or terms don't match actual exposure. E&S can help, but structure matters.

• Use parametric layers for quake, wind, flood, or business interruption where modeling misses the mark.
• Offer micro-limits for small insureds who need some coverage rather than none.
• Reward mitigation: roof age credits, brush clearance, flood vents, and elevation improvements.
• Check E&S basics: financial strength, claims handling, wording clarity, and surplus lines taxes.

Lessons from recent catastrophe losses

• Secondary perils are primary now: hail, straight-line wind, wildfire, and flood outside FEMA maps.
• Demand surge and supply chain constraints inflate severity-value schedules must be current.
• Model miss is common on convective storm; use multiple views of risk and ground-truth data.
• Ordinance or law, roof schedules, and time-element sublimits can decide the claim outcome.

Carriers and brokers: operate like one team

• Quarterly pipeline calls: appetite changes, hit ratios, and feedback on why deals win or lose.
• Submission quality score: agree on must-have data and measure it.
• Risk control loop: pre-bind recommendations and post-bind follow-up with proof.
• Claims clinics: share patterns, close files faster, and reduce frictional cost.
• Service SLAs: response times, renewal milestones, and escalation paths in writing.

Build a people-first culture

Tools help, but people close deals and settle claims. Cut busywork, invest in skills, and give teams clear ownership.

• Automate admin work so producers and underwriters spend time with clients and data that matters.
• Create small squads with clear goals and the authority to act.
• Set aside time each week for skill-building and product knowledge.

Quick checklist

• Start renewals early with clean data and a clear story.
• Offer structures with visible trade-offs-don't bring one option.
• Standardize submissions and use data enrichment.
• Deploy AI where it cuts cycle time or leakage-and measure it.
• In cyber, prove control maturity and readiness with artifacts.
• Use E&S and parametrics to close real gaps, not as a default.
• Run joint carrier-broker operating rhythms like a single team.
• Invest in people; remove low-value work.

Final thought

Hard markets reward clarity, speed, and follow-through. Get the basics right, then layer in smart tech and better structures. Do that consistently and you'll win share, even in a tough cycle.