How does Ungrounded Electrical System protect from Overvoltage?

Under the conditions of a stuttering arcing ground fault (intermittent arc condition), the voltage to ground of the phase voltages can increase to many times the magnitude of the line-to-line voltage. I would not want to attempt to mitigate that with a surge arrester. You can have the same advantages of an ungrounded system (such as continuity of service), and control the transient overvoltage by applying a high-resistance grounded system. Hence my comment to convert the ungrounded system to something else.

Firstly a truly ungrounded system is virtually impossible as all rotary machines and cables have a capacitance to ground. This capacitive current sums to zero for no earth fault in a system.

If there is an earth fault current will flow in these systems and this can easily reach danger levels even with low capacitance systems. The maximum allowed capacitance for a person safe system is easily calculated.

If you use a high resistance ground you can detect an earth fault and protect any persons. To avoid the transient over voltages that can happen must coordinate the ground resistor value versus the current flowing to ground in the systems capacitance in a phase with no earth fault. In large systems this becomes a problem.

The other method is to use a 3 phase zig/zag earthing transformer with an open delta detecting resistor for earth faults. This method gives maximum protection versus transient overvoltage.