What can excess and surplus underwriters do when the old way of doing business is no longer a "swashbuckling, romantic, big-dollar, easy-to-do" activity in the face of increased competition?

"We will have to see what needs to be done and do it better," said Robert Angle, president of the National Association of Surplus Lines Officers, speaking from the site of the association's annual meeting, which gets into full swing Friday when its official program of speakers and panel discussions begins.The excess and surplus market traditionally has provided coverage where no other market exists, usually at higher prices and under minimal regulatory supervision. That business is written through licensed E&S brokers called ''wholesalers."

But their bread-and-butter business, including aviation and product liability insurance, now is done "with aplomb by retail insurers, much to our chagrin," said Mr. Angle, regional vice president of marketing at national wholesale broker Montgomery & Collins' Glastonbury, Conn. office.

So brokers will be searching out opportunities in the "now really difficult lines, not just the ones with a little hair on them," Mr. Angle said.

Those specialty areas, he said, include environmental liability, new

financial institutions that "don't have a history" and medical products both in development and awaiting Food and Drug Administration testing.

There are also areas that big-name insurance brokers still won't touch, he added, including amusement parks and security guard services.

The change in coverages to offer shows that the "old role of the wholesaler - the retailer not knowing the marketplace or the coverages - is long since gone. We need to be intelligent enough to know what we can do better," Mr. Angle said.

Wholesalers' uncertainty is reflected in the convention's panel topics.

For instance, the future of the traditional insurance market will be discussed here Friday by Jon Harkavy of USA Risk Group, Joseph M. Walsh of American Empire Group and Jonathan J. Crawley of Sphere Drake Underwriting Management (Bermuda).

The new competition has prolonged the current "soft" market by making coverage more readily available in most lines, and at lower prices, said Richard Bouhan, Napslo's executive director, who will moderate this panel.

Napslo's members are "survivors of a soft market that thrives on hard market circumstances," he said.

The E&S market peaked in the "hard" market of the late-1980s, when doctors, municipalities and others that otherwise could not buy professional and municipal liability coverage, thanks to a spurt in lawsuits, were willing to pay wholesalers more for the necessary coverage.

"There's no question we are in the seventh year of a three-year soft market cycle," he said. "There is no relief in sight. We have to deal with this now. We can't wait for the market to change."

Napslo members also are more concerned about state regulation of their industry than they were a year ago, Mr. Bouhan said. State regulation is ''always a big concern to an industry that operates under an environment that is not regulated."

Possible federal regulation is still a concern to wholesalers, he said, but ''there hasn't been much movement" in Congress on H.R. 4900, the so-called Dingell bill, sponsored by Rep. John Dingell, D-Mich., chairman of the House Energy and Commerce Committee.

The bill would create a federal agency to monitor insurance company solvency closely.

It also would create a licensing system under which insurers with at least $50 million in policyholder surplus that are writing insurance for large buyers with about $10 million in net worth could opt out of state regulatory systems.

Napslo objects to the bill's provision exempting these large-risk insurers

from rate and form regulation and putting them on equal footing with excess and surplus underwriters.

"While no one is dismissing the potential for federal involvement, there

hasn't been much movement in Washington since the hearings" held last summer, at which Napslo and other insurance organizations testified, Mr. Bouhan said.

Speaking about the future of state regulation at a panel during Napslo's convention Saturday will be David J. Brummond of the National Association of Independent Insurers; David J. Walsh, Alaska's insurance director; Ronnie C. Moore of Southern General Agency; and Derek Hughes of Western World Insurance Group.