E&S market keeps expanding despite rate cuts

The excess and surplus lines market continues to grow, despite declining rates in some lines, according to data from Business Insurance and other industry sources.

The 15 states with surplus lines stamping offices, which include the largest E&S markets, reported a combined $46.23 billion in first-half premiums, a 13.2% increase over the same period last year.

In the full U.S. E&S market, premiums increased 13.4% in 2024 to $98.18 billion, according to an S&P Global analysis.

The largest wholesalers and surplus lines insurers also reported growth in 2024.

The top 10 property/casualty wholesalers collectively reported $108.65 billion in premium volume, a 13.8% increase over the 2023 top 10 (see chart here).

Premium written through intermediaries with delegated underwriting authority also increased, to $56.8 billion, up 28.5% over 2023, a jump that includes some significant acquisitions by companies in the ranking.

This is a new BI ranking, reflecting long-term changes in the market, with numerous large companies having significant wholesale, managing general agent and managing general underwriter operations. We retain the specialty MGA, MGU and Lloyd’s coverholder ranking but have concentrated on the five largest companies (see chart here).

Liability rates continue to climb in the E&S market as court awards and settlements grow,  said Paul G. Smith, corporate senior vice president at H.W. Kaufman Group, the parent of Burns & Wilcox.

Various specialty lines remain tough, including hospitality, habitational, law enforcement and other accounts with firearms exposures, and auto liability, he said.

In addition, accounts with potential sexual molestation claims are seeing increases, Mr. Smith said.

“It’s been a tough class for a long time now, and it continues to be a tough class for good reason,” he said.

“The nonadmitted property/casualty market continues to grow incrementally,” said Tim Turner, CEO of Ryan Specialty.

Even though some property rates are falling by 30%, most of the business that moved to the nonadmitted market is staying there, he said.

Part of the reason is a structural change that has seen a sharp increase in large insurers entering the nonadmitted sector since prior hard markets, Mr. Turner said.

“Many of the large admitted companies either bought E&S companies or established them. So, there’s not that same cyclical gravitational pull of the business back into the admitted market,” he said.