E&S market solid, will keep growing: Execs

SAN DIEGO — The excess and surplus lines market continues to see strong submission flows despite softening admitted rates in some areas, executives say.

The market will continue to grow, although at a slower pace, as buyers seek specialized coverage for climate, technology and other emerging risks, they said in interviews Monday at the annual conference of the Wholesale and Specialty Insurance Association.

The E&S market remains competitive but healthy, said Michael Garrison, Red Bank, New Jersey-based head of wholesale for Navigators and head of international at The Hartford.

In contrast to past market cycles, underwriting remains disciplined, Mr. Garrison said. Insurers are using data sets to analyze loss cost trends, and line by line there are pockets of good stability, he said.

“You’ve got shifting exposures, shifting regulatory environments. We haven’t seen the flow slow down into the space,” he said.

U.S. E&S direct written premiums increased 11% in 2024, less than the 15% increase the prior year but more than the 8% rise in the overall U.S. property/casualty industry, according to a report issued last week by Fitch Ratings.

E&S accounts for 9% of the property/casualty market, nearly double the segment’s share in 2017, fueled by a period of outsized growth, Fitch said.

In the past, the E&S market was niche and specialized, said Liz Kramer, New York-based president of excess and surplus lines at Munich Re Specialty.

“That’s not the case today. We’re like the standard specialty now, it’s so big,” she said.

The market is in a transition period, where property rates are generally soft and casualty rates are the strongest, especially in transportation, but other tougher classes are still seeing a lack of consistency in pricing and terms, she said.

“This is a true underwriters’ market because it’s easy to underwrite in the hard market and it’s easy to underwrite in the soft market, but in this period where it’s firm, you have to be more careful,” she said.

The E&S market has seen “incredible growth,” said Kyle Burnett, New York-based senior vice president, head of E&S property, North America at Swiss Re Corporate Solutions.

“We obviously went through a hard market, but the world is different, the buyer is different. People need tailored coverage,” Mr. Burnett said.

Major hurricanes, wildfires and flooding events have pushed the E&S market to adapt and grow, he said.

In the past, buyers stuck with standard admitted coverage “because it was the safe route. Now it’s what does my business need today and how can I buy that a bit differently, that’s cost-effective for me and my business,” he said.