Choosing the Right Equipment Breakdown Reinsurer

As equipment breakdown risks become more complex and interconnected, carriers need reinsurance partners that deliver engineering expertise, technical insight and long-term strategic support — not just capacity.

By: Travelers | July 17, 2026

The equipment breakdown reinsurance market is at an inflection point. Aging infrastructure, accelerating automation and the proliferation of digitally connected systems are reshaping how equipment breakdown (EB) losses originate, escalate and interact, demanding a new level of technical sophistication from reinsurers and the carriers who depend on them.

Where a power surge once meant a discrete equipment loss, it can now trigger a cascading failure across networked systems. A controls malfunction can halt an entire automated facility in moments. A refrigeration breakdown can compound into widespread spoilage and business interruption claims. As these scenarios become more common, the reinsurance structures that support carriers must evolve, along with the knowledge needed to assess and manage these increasingly interconnected risks.

More than capacity, the right EB reinsurer delivers technical depth, engineering integration, flexible program structures and a long-term commitment to supporting carriers as risks evolve. “Understanding these trends is essential, and it underscores the importance of partnering with a reinsurer that brings not only capacity but also the insight to stay ahead of what’s next,” said Matt Stambaugh, AVP and National Director of Travelers BoilerRe^®.

Here are six qualities that distinguish the strongest EB reinsurance relationships.

1. Dedicated EB knowledge across underwriting, engineering and claims

Matt Stambaugh, AVP and National Director of Travelers BoilerRe^®

Dedicated EB knowledge means underwriters, engineers and Claim professionals who specialize exclusively in equipment breakdown, staff who understand how complex systems fail, how losses cascade and how to price and respond to risks that generalist teams are not equipped to handle. That means experience spanning traditional boilers and pressure vessels as well as newer technologies like robotics, renewable energy systems and battery storage.

That depth is becoming harder to replicate as experienced boiler inspectors, engineers and technical Claim professionals retire and next-generation technologies require different skill sets. Carriers should look beyond titles and ask whether a reinsurer has the strength to support developing risks at scale.

The real differentiator, according to Stambaugh, is how those disciplines connect. “The best reinsurers tie inspection insights, claims data and risk control findings directly back into underwriting and pricing,” he said. “It’s a continuous feedback loop that requires true engineering depth across the organization.” The real test is not whether a reinsurer collects that data but whether it translates into underwriting action, pricing discipline and risk prevention before losses occur.

2. Flexible treaty, facultative and ceding structures

Flexible treaty, facultative and ceding structures allow carriers to align reinsurance arrangements precisely with their risk appetite, growth stage and distribution model, rather than fitting a portfolio into a standard template that may not reflect how that book performs. No two EB portfolios look alike. A regional carrier building its first EB offering has different needs than a national carrier managing a mature book, and both require a reinsurer that can structure programs accordingly. That includes quota share, net pricing, risk-sharing and hybrid models tailored to a carrier’s specific risk appetite, distribution model and growth stage.

Disciplined flexibility is what separates responsive reinsurance support from customization for its own sake. While flexibility matters, structures that are overly customized or priced only to win business can create misaligned incentives or weaken long-term portfolio performance. The strongest reinsurers can tailor structures while maintaining pricing integrity, clear accountability and sustainable program economics.

Stambaugh emphasized the importance of flexibility over templated approaches. “You need a reinsurer with the knowledge to structure programs that match where you are today and where you want to be tomorrow,” he said. As exposures shift with modernized machinery and advancing equipment classes, program structures should be able to adapt in step.

3. Superior jurisdictional inspection capabilities

Superior inspection capabilities means broader jurisdictional coverage, higher on-time completion rates and engineering-driven field reviews that assess risk early, all of which translate directly into fewer losses and a stronger policyholder experience. Travelers BoilerRe completed more than 191,000 inspections in 2025, with an overdue rate of just 3.4% at year’s end, a figure that reflects both the scale of the operation and the discipline behind it.¹

On-time performance matters because delayed inspections can disrupt operations and erode policyholder satisfaction. The value of a strong inspection program, however, goes beyond scheduling. As equipment becomes more integrated, inspection insights help carriers understand interdependencies that may not be visible in a traditional component-by-component review.

“When inspection programs are done well, they become a competitive advantage,” Stambaugh said. Reinsurers with broad jurisdictional capabilities and experienced field engineers feed those insights back into underwriting and risk mitigation, creating a tighter connection between what happens in the field and how risk is priced.

4. Specialized, technical claims handling

Specialized EB claim handling means efficient diagnosis, access to equipment-specific technical knowledge and a dedicated vendor network, all of which directly reduce loss severity and protect policyholder experience in ways a generalist claim model cannot. The strongest reinsurers combine technical claims experience with rapid response: diagnosing issues quickly, deploying the right specialists and working to minimize downtime.

In automated environments, downtime costs escalate quickly. Response time is not just a service metric; it influences loss severity, customer satisfaction and a carrier’s ability to retain business. That’s why purpose-built EB claims models matter. Look for dedicated intake, access to technical knowledge and a vendor network calibrated specifically for equipment and machinery losses.

Inspection and claim teams often work directly with customers. “Your reinsurer’s claim team becomes an extension of your business,” Stambaugh said. “They deliver services under your brand, and their knowledge and responsiveness directly influence your customer’s experience and your reputation.” That performance affects agent confidence, customer retention and the carrier’s standing in the market.

5. Full-service program support and collaboration

Full-service EB program support means a reinsurer that contributes across the entire program life cycle, from pricing guidance and revenue modeling to coverage design, distribution strategy and producer training, not just at the point of risk transfer. Regular portfolio reviews help carriers refine rating, forms and appetite as the market shifts.

“Travelers BoilerRe works alongside carriers to develop programs, train teams and enhance distribution efforts,” Stambaugh said. That includes underwriting guidance, engineering-backed insights, producer education and custom sales materials. The goal is to function as an operational partner, not just a risk transfer mechanism. “Day-to-day responsiveness and collaborative support often make the difference between a functional program and one that truly performs,” he added.

6. Long-term stability and continuous investment

Long-term stability in an EB reinsurer means consistent financial strength ratings, disciplined pricing through market cycles, sustained investment in engineering talent and technology, and a demonstrated commitment to the line, all of which signal that a reinsurer will be there when a carrier needs it most.

Stambaugh put it plainly: “EB reinsurance isn’t a market you can jump in and out of opportunistically. It requires continuous investment in people, technology and knowledge.” BoilerRe, as part of Travelers, brings more than 100 years of EB experience backed by an A++ A.M. Best rating. That kind of staying power reflects a commitment to the line through all market conditions.

Getting started with an equipment breakdown reinsurer

The six qualities above share a common thread: They reward carriers who treat reinsurer selection as a strategic decision, not a procurement exercise. The strongest indicators of future performance are not limited to historical loss results, pricing or capacity. Carriers should also evaluate whether a reinsurer has the engineering depth, data discipline, response speed, inspection scale and long-term investment needed to perform as risks continue to develop.

A reinsurer who understands a carrier’s distribution model, risk appetite and long-term strategy can help grow an EB portfolio while supporting the carrier’s business and its customers’ bottom line. “Alignment, responsiveness and technical excellence determine whether an EB program succeeds,” Stambaugh said. “Find a reinsurer who shares your vision and brings real experience to every aspect of the business.”

To learn how Travelers BoilerRe can evaluate and structure an EB reinsurance program for your portfolio, visit BoilerRe.com.

¹Travelers and Jurisdiction Online as of 12/31/2025

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

The Travelers Companies, Inc. (NYSE: TRV) is a leading provider of property casualty insurance for auto, home and business. A component of the Dow Jones Industrial Average, Travelers has approximately 30,000 employees and generated revenues of approximately $28 billion in 2016. For more information, visit www.travelers.com.

Rethinking Risk: Why Self-Insured Retentions Are Gaining Ground for Complex Liability Risks

As product liability risks grow more complex, self-insured retentions (SIRs) can help qualified organizations reduce costs, expand insurance capacity and strengthen claims control.

By: The Hanover Insurance Group | July 1, 2026

A Shifting Liability Landscape

Product liability risks are entering a new phase of complexity. Pricing pressures remain front and center, even as segments of the market begin to moderate. Capacity continues to fluctuate, attachment points remain elevated and underwriting discipline has tightened across higher hazard general liability and excess and umbrella layers.

Recent data reflects that reality. While U.S. commercial insurance pricing trended downward throughout 2025, insureds with significant product liability exposures continue to face challenges in securing optimal placements. A 2025 industry survey shows that 86% of independent insurance agents report challenges with market access and product availability as insurance carriers adjust capacity and underwriting strategies, highlighting that access to coverage limits remains limited for many complex risks.

Beneath these conditions lies a deeper issue: escalating loss costs. Social inflation continues to drive severity, with U.S. liability claims increasing 57% over the past decade due to rising litigation and large jury verdicts. These trends are reshaping how carriers deploy capacity and how clients access coverage.

While the market shows signs of softening, the underlying cost dynamics remain unchanged. “In an environment shaped by inflation, supply chain disruption and litigation volatility, these pressures are not only influencing pricing but also reshaping how organizations think about risk ownership and financing structures,” said Seth Hollis, head of specialty general liability at The Hanover. “Borrowed capacity is only one part of the equation. Retained risk is increasingly becoming another.”

For larger, well-managed organizations, self-insured retentions (SIRs) can serve as a powerful strategic lever, improving cost control and supporting long-term program stability. This not only serves as a strong selling point for agents but also enables them to better position clients within a challenging market.

Aligning SIR Strategies to Product Liability Risk Profiles

Seth Hollis, Head of Specialty General Liability, The Hanover

Product liability presents a risk profile that often aligns well with retained risk strategies.

Many organizations experience a pattern of predictable, lower-severity claims, while more catastrophic losses remain infrequent but impactful. Traditional insurance structures tend to price toward those high-severity events, driving premium costs even when day-to-day loss activity remains manageable.

For organizations with the right financial and operational profile, this presents a risk management opportunity. “Retaining a more predictable layer of risk can improve efficiency and total cost of risk over time, particularly for companies with strong safety controls and claims oversight,” Hollis said. “These organizations typically combine financial strength with operational discipline, supported by consistent cash flow, credible claims data and a long-term view of risk financing.”

In practice, SIR strategies can take multiple forms depending on the organization’s goals and risk profile. For example, a manufacturer with more frequent, predictable claims may retain a defined layer of risk, while another manufacturer facing less frequent but more severe claims may use an SIR to manage volatility while preserving protection for catastrophic losses. Larger commercial accounts may also use SIRs to gain greater influence over claims management outcomes, using retention to more closely align financial and operational controls.

The key is intentionality. SIRs should be designed around a well-understood risk profile, not introduced as a default response to market pressure.

From a carrier perspective, SIR structures also introduce alignment. When insureds manage claims within their retention, they tend to focus on preventing losses, handling defense strategically, and resolving matters more quickly. This alignment can lead to more sustainable results across the account.

The Value Equation: Cost, Capacity and Control

SIRs are often associated with premium savings — and for good reason.

By assuming a portion of risk, insureds can reduce the amount of exposure transferred to the carrier, which typically results in lower upfront premium.

However, that shift also introduces greater financial responsibility. Losses within an SIR are funded directly by the insured and may not be subject to an aggregate cap, requiring organizations to maintain adequate reserves and be prepared to absorb multiple losses within a policy period.

For organizations equipped to manage that responsibility, the value of an SIR extends beyond immediate cost savings:

Improved access to capacity: SIR structures can make complex product liability risks more attractive to carriers, supporting greater willingness to deploy limits.
Enhanced program structure: Flexibility exists to tailor retention levels across different product lines within a general liability program, allowing organizations to align retained risk with their operations.
Long-term cost stability: Reducing fixed premium costs while retaining predictable losses can lead to a more stable total cost of risk over time.
Greater claims influence: Organizations gain more direct oversight of defense strategy, legal expenses and settlement decisions within the retention.

Amid ongoing economic uncertainty and litigation volatility, these benefits can help organizations achieve more consistent and predictable risk outcomes.

Claims Management: The Critical Differentiator

The effectiveness of an SIR program ultimately depends on claims execution.

Managing losses within a retention requires discipline, speed and coordination. “Organizations need the ability to respond quickly to incidents, engage legal resources effectively and resolve claims before costs escalate.” Hollis said. This requires dedicated internal risk management leadership or strong alignment with third-party administrators, supported by clearly defined escalation protocols for more complex claims. A consistent legal strategy, backed by experienced counsel, plays a critical role in maintaining control over outcomes, while ongoing monitoring of claim trends helps ensure that lessons learned are continuously applied.

Even above the retention, carrier expertise remains essential. It provides loss analytics, benchmarking insights and strategic guidance that support the retained layer, help protect excess policies and drive a lower total cost of risk over time.

When these elements are aligned, SIR programs can perform as intended — improving outcomes at both the primary and excess layers.

Guiding the Client Conversation

For independent insurance agents and brokers, SIRs represent an opportunity to elevate the conversation around risk management for the right clients.

The most effective discussions move from “taking on more risk” to focusing on structuring risk more strategically. This includes aligning retention levels with a client’s operational realities and financial tolerance, identifying losses that may already be absorbed indirectly through inefficiencies or premium structure, and assessing readiness to manage claims within a retention framework. SIRs can be thoughtfully positioned as a proactive strategy rather than a reactive adjustment.

There are also clear advantages for agents. SIR solutions are not widely utilized across the middle market, creating differentiation in how programs are structured. As clients grow in size and sophistication, SIRs offer a pathway to evolve coverage without displacing existing relationships.

“This evolution supports long-term partnerships, allowing agents to guide clients from more traditional risk transfer agreements into increasingly sophisticated risk financing strategies over time.” Hollis said.

The Importance of Carrier Partnership

Carrier selection becomes especially important in SIR programs.

Not all insurance carriers are equipped to support retained risk structures, particularly in complex product liability environments. Even among those that can, many limit loss-sensitive program offerings to national account clients, where qualifications often depend on workers’ compensation being structured on a loss-sensitive basis. “The most effective partners bring a combination of specialized underwriting expertise in product liability and dedicated claims resources that extend beyond traditional coverage,” Hollis said. “They also provide loss control and risk solutions that help insureds better manage exposures within the retention.”

Some carriers, like The Hanover, have dedicated complex general liability teams that can offer SIR structures on general liability programs for a range of customers. They can also maintain guaranteed cost structures for other lines, allowing clients to take on risk selectively where it aligns with their strategy. These capabilities enable more tailored program design as client needs evolve.

In complex liability segments, specialization matters. Precision in underwriting, claims and risk advisory support can significantly influence outcomes across the entire insurance program.

A Strategic Path Forward

Self-insured retentions are not a universal solution, but in today’s product liability landscape, they are increasingly relevant. Market dynamics will continue to evolve, while underlying loss trends — driven by litigation costs and severity — remain persistent. Organizations that take a deliberate approach to retained risk today are better positioned to navigate the market cycles of tomorrow.

For qualified insureds, SIRs can improve access to coverage, stabilize costs and introduce greater control over claims outcomes. For agents and brokers, this presents an opportunity to grow alongside clients by delivering more value-added strategic advice and placing business more effectively in challenging markets. Partnering with carriers like The Hanover that have the expertise and flexibility to support retained risk structures is critical. Together, these relationships help build insurance programs that are more resilient and better meet customer needs.

To learn more, please visit: https://www.hanover.com/

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

The Hanover Insurance Group, Inc. is the holding company for several property and casualty insurance companies, which together constitute one of the largest insurance businesses in the United States. The company provides exceptional insurance solutions through a select group of independent agents and brokers. Together with its agents, The Hanover offers standard and specialized insurance protection for small and mid-sized businesses, as well as for homes, automobiles, and other personal items. For more information, please visit hanover.com.

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