The insurance industry is experiencing a fundamental shift toward specialization, driven by increasingly complex risk landscapes and evolving regulatory frameworks. As carriers and brokers grapple with everything from cyber threats to climate change impacts, the days of one-size-fits-all approaches are rapidly disappearing.

“I’m very excited about this topic because specialization unlocks protection with confidence in our industry,” said Dawn Brost, Senior Vice President of E&S Brokerage Excess Casualty at Nationwide. “Carriers want to specialize, brokers want to specialize—it’s the key to aligning nuanced broker knowledge with underwriting expertise.”

However, Brost emphasized that understanding the significance behind this trend is crucial. “What’s truly important is understanding why specialization matters, what it really means in practice, and how it benefits our industry,” she said. “Ultimately, the focus should be on how specialization creates tangible value for the insureds.”

Market Pressures Driving the Need for Specialization

Dawn Brost, Senior Vice President of E&S Brokerage Excess Casualty, Nationwide

Today’s insurance landscape presents challenges that require deep, focused expertise rather than broad generalist knowledge. The surplus lines market, in particular, faces a confluence of factors that make specialization not just beneficial, but essential for survival.

Emerging risks are multiplying and evolving at an unprecedented pace. “We constantly deal with emerging issues beyond regulatory matters and tort reform considerations,” Brost said. “We must consider how cyber risks might bleed into our coverage areas, or how environmental matters impact our policies. Wildfire concerns and climate change effects also require careful evaluation for their potential impact on operations or exposures we write from a third-party perspective.”

The complexity extends beyond traditional risk categories. “Different parts of the country are more vulnerable to specific emerging risks such as human trafficking, homeless housing, and natural disasters,” Brost explained. “While these might seem outside the realm of casualty insurance, they’re actually directly relevant.”

Technology presents another dimension of complexity that demands specialized knowledge. “Take autonomous vehicles as an example—we haven’t fully developed insurance solutions for them yet,” Brost said. “Cyber risk is another area where specialization will be crucial to effectively approach this segment of the business.”

The industry’s historical approach of deploying large capacity is no longer viable. “The industry has been exercising capacity control for quite some time, with the days of deploying $25 million blocks a rare occurrence in working layers,” Brost noted. This shift requires more nuanced underwriting and precise risk assessment.

Geographic Specialization: The Foundation of Effective Risk Management

While specialization takes many forms, geographic expertise has emerged as fundamental to success in surplus lines insurance. The variation in regulatory frameworks, litigation climates, and social inflation impacts across different jurisdictions creates a complex web that only local specialists can effectively navigate.

“The geographic piece is where true specialization takes root in surplus lines,” Brost said. “With local knowledge and underwriting precision, we can achieve outsized value. Truly understanding the jurisdiction, claims realism, and local litigation climates allows us to gauge how social inflation actually impacts potential loss severity.”

The regulatory landscape varies dramatically across states, with constant changes that require dedicated attention. “I wholeheartedly agree that regulatory change is unending,” Brost said. “Once you think you have it figured out, it changes, or perhaps more accurately, it evolves.”

Key surplus line states present their own unique challenges. California demonstrates particular complexity where “Northern and Southern California function differently from one another,” according to Brost. Texas shows “variation by county,” while Florida has “recently undergone tort reform, prompting questions about current and future impact on casualty insurance.”

The ripple effects of regulatory changes create additional complexity. Brost noted that Nationwide closely monitors “the ‘next tier’ or fast-following states and geographies that tend to adopt challenging regulatory environments. For example, we view the Pacific Northwest, specifically Washington and Oregon, as fast followers to California’s regulatory approach.”

Geographic specialization extends beyond state boundaries to encompass regional litigation trends and social factors. “In the Southeast, states like Georgia and South Carolina have positioned themselves as plaintiff-friendly venues,” Brost observed. “These trends significantly factor into our strategic planning and risk assessment processes.”

The importance of local knowledge becomes particularly evident when examining specific industry sectors. “Habitational is perhaps my greatest concern, even ahead of products manufacturing,” Brost said. “It’s one of the sectors most vulnerable to social inflation due to crime scores and litigation trends.”

The Power of Specialist-to-Specialist Relationships

The evolution toward specialization has fundamentally transformed the carrier-broker relationship, creating opportunities for deeper collaboration and more effective risk solutions. When both parties bring specialized knowledge to the table, the results can be transformative.

“The specialist-to-specialist connection—underwriter to broker—is crucial,” Brost said. “This specialization extends within organizations too. Brokers need specialists in risk management and loss control.  At Nationwide, actuarial and claims specialists are part of our underwriting team.”

The limitations of generalist approaches become apparent when dealing with complex risks. “Having worked as a generalist in underwriting during my career, I recognize that while you develop transferable skills in understanding exposure patterns and pricing approaches, there are significant limitations,” Brost explained. “As a generalist, you simply can’t go deep enough. More concerning, you may not recognize what you don’t know.”

Specialized brokers bring invaluable regional insights that enhance the underwriting process. “We prioritize partnerships with brokers who have boots on the ground insight because they can better articulate risks to our underwriters,” Brost said. “Brokers ideally sit and work within the territory of risk they’re placing.”

The benefits of specialized partnerships become evident in challenging jurisdictions. “New York is a great example,” Brost said. “When it comes to labor law, brokers with New York expertise understand those challenges and know what coverage limitations to navigate. They may not always secure the ideal coverage due to inherent challenges, but they can explain the situation to their insured while understanding our carrier perspective.”

This deep understanding enables more creative and effective solutions. “Liquor liability serves as another example, where volatility varies widely from state to state,” Brost noted. “Brokers operating within those territories handling hospitality exposures understand that we may need to implement sublimits or ask them to place the coverage separately.”

However, specialization must be balanced with responsiveness. “Brokers absolutely need timely responses, but the fastest or cheapest quote should be questioned,” Brost said. “Is that carrier specializing in that space? Are they adequately pricing and providing coverage to sustain solutions for that account over time?”

As a protection company with deep expertise across multiple disciplines, Nationwide has developed an approach that emphasizes sustained partnerships with specialized brokers. “What I’m most passionate about at Nationwide is our intentional selection of specialized broker partners that align with our appetite and strategy across the country,” Brost said. “Within Nationwide, we have embedded underwriting specialization that is synced and linked to claims and actuary – all in-house with deep expertise.”

The company’s commitment to specialization extends to its hiring and development practices. “If we encounter a sector in the industry where we lack expertise, we commit to growing it or hiring for it,” Brost explained. “We do not enter business sectors that we don’t understand or cannot bring specialization to.”

Looking ahead, the trend toward specialization shows no signs of slowing. The industry must continue developing both technological capabilities and human expertise to address increasingly complex risk landscapes. “We’ve got to get smarter and faster with how we utilize data and data decision insights as well as AI in addressing these exposures,” Brost said.

The stakes are high, but the opportunities for those who embrace specialization are significant. “We understand the stakes—reputational, regulatory, and financial,” Brost said. “Our specialized teams are built for precision under pressure.”

To learn more, visit https://nationwideexcessandsurplus.com/brokerage/.

About Nationwide

Standard & Poor’s A+¹ | AM Best Rated A² | Fortune 100 Company
Products underwritten by Nationwide Mutual Insurance Company and Affiliated Companies. Not all Nationwide affiliated companies are mutual companies, and not all Nationwide members are insured by a mutual company. Home Office: One Nationwide Plaza, Columbus, OH. Nationwide, the Nationwide N and Eagle, and other marks displayed on this page are service marks of Nationwide Mutual Insurance Company, unless otherwise disclosed.
¹The fifth highest of 21 ratings. The outlook for this rating is stable. Received: 12/22/08. Affirmed: 05/16/23
²The third highest of 16 ratings. The outlook for this rating is stable. Received: 12/7/23. © 2025 Nationwide Mutual Insurance Company.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Nationwide. The editorial staff of Risk & Insurance had no role in its preparation.