US E&S market past peak growth but remains bullish

The US excess and surplus (E&S) marketplace as measured by direct premiums written (DPW) grew 17 percent to $115 billion in 2023 based on data from AM Best, analysed by investment bank Jefferies in a September 20 research note. 

Growth slowed from 2022’s 19 percent and was well down on the 25 percent growth seen in 2021, but it continued to be above the total P&C market’s 10 percent and commercial market’s 7 percent. 

At just over $115 billion in DPW, E&S represents 12 percent of the total P&C market or 24 percent of the commercial market (~95 percent of E&S is commercial), Jefferies said. 

More recent 1H24 data from the Wholesale & Specialty Insurance Association (WSIA), which represents 15 states and reflects ~65 percent of surplus lines premium volume, shows 1H24 was another favourable period for E&S premiums, its data showing a 10 percent year-on-year increase. Jefferies estimates that FY24 total E&S DPW will be just over $125 billion (10 percent year-on-year growth).

“We expect specialty growth to outpace standard market commercial growth.”

“Looking ahead, we believe we are past peak submission and premium growth for this E&S cycle, although we expect specialty growth to outpace standard market commercial growth. Into 2025, we do not expect the admitted market to materially take back business from the non-admitted market that it had non-renewed in prior years. We expect this to hold true for both property and casualty lines,” Jefferies said.

“We expect rates to continue to be favourable, but not accelerate overall, in 2H24 and 2025. We find E&S rate conditions to be bifurcated between the two major lines, casualty and property, and somewhat a reversal of rate experience compared to 2023.”

For more news from the American Property Casualty Insurance Association (APCIA) click here.

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