The U.S. excess and surplus (E&S) casualty insurance market has been growing fast and shows no signs of slowing down. In 2023, it broke through $100 billion in direct premiums written, marking six straight years of strong growth, according to AM Best. This market has become an important option for risks that traditional insurers often avoid.
One big factor behind this growth is the rise in large jury awards, sometimes called “nuclear verdicts,” where payouts top $10 million, far exceeding actual damages. These huge verdicts have pushed more businesses toward the E&S market but have also made it harder for insurers to keep up.
Richard Wagner, who leads U.S. excess casualty at Aspen, says the market’s growth can last, but only if carriers can handle the pressure from these outsized claims. He warned that if a major insurer were to fail, clients might return to the more regulated admitted market, which companies have been moving away from.
Despite plenty of overall capacity in the E&S market, Wagner notes it’s uneven. Some businesses, especially those tied to cars, real estate, and certain risky products, struggle to get enough coverage. Insurers are pulling back limits and avoiding some risks to protect themselves from unpredictable, costly claims.
Wagner points to the growing frequency and size of nuclear verdicts as a driving force behind these changes. A recent 2024 report highlighted that the median size of these verdicts now stands at $36 million — more than three times what it was ten years ago.
Wagner’s biggest concern is the surge in settlement amounts. He believes people hurt by others’ mistakes deserve fair pay, but not when payouts become wildly disproportionate or aimed at punishing those responsible. This trend, he says, isn’t sustainable.
Plaintiff lawyers, backed by litigation funding and smart jury strategies, have helped push awards higher. In response, insurers have tightened policy terms and have been more careful in underwriting. Still, Wagner feels these moves only go so far.
There may be signs of change. Recent tort reforms in Florida and Georgia have set new limits on claims timelines and on damages for medical expenses. Wagner hopes this is just the start of wider reforms to keep claim values fair.
He also emphasizes the need for the insurance industry to do more education. Right now, legal ads dominate the airwaves, while insurers don’t explain how nuclear verdicts affect everyone—from higher auto insurance to rising rent and prices for goods.
Looking ahead, Wagner is positive about new areas that will require E&S coverage, like renewable energy, chip manufacturing, special equipment, and developments linked to artificial intelligence, such as data centers. He also sees residential construction as a growing driver, given the ongoing housing shortage in the U.S.
Over the next two to three years, Wagner expects the E&S casualty market to become more mainstream. He predicts more businesses that once shunned it will turn to E&S coverage, making it a regular part of the insurance world.
“As more insureds turn to the E&S market for solutions, unadmitted coverage will increasingly become the norm in many segments,” Wagner said.
The E&S casualty market faces challenges, but with careful management and possible legal reforms, it looks set to keep playing a growing role in U.S. insurance.