The US excess and surplus (E&S) insurance market continued to grow strongly in 2024, though its pace has slowed for the second year in a row, according to S&P Global Market Intelligence data. Premiums in this sector have seen double-digit annual growth for six straight years, sparking debate over whether this surge is a short-term reaction or a lasting change.
Matthew Dolan, president of North America specialty and executive vice president of global risk solutions at Liberty Mutual Insurance, believes the market shift is here to stay. He says the E&S market now serves a structural purpose, not just one driven by cycles. While typical factors still push some business from admitted carriers to E&S, the market’s growth reflects a deeper, ongoing need.
Dolan points to several reasons behind this shift. Increasingly unpredictable risks tied to climate change, weakened infrastructure, and natural disasters have made property insurance more complicated. The E&S market’s ability to react quickly is vital amid hotter, wetter storms and fragile infrastructure. Casualty insurance faces similar challenges due to social inflation, legal pressures, and economic uncertainties, pushing business toward more flexible E&S options.
Specialty lines like environmental, healthcare, financial, and especially cyber insurance are also expanding the market. Cyber coverage requires adaptability as threats evolve rapidly. Additionally, the rise of wholesale brokers has boosted E&S growth. These wholesalers link risks with carriers efficiently, encouraging more investments and building a cycle of expansion.
Still, not all types of insurance within E&S are growing at the same rate. Property insurance is more cyclical and sensitive to pricing swings, particularly in wind-exposed catastrophe coverage. Cyber insurance pricing may also lag behind actual risk levels, with potential price adjustments expected after significant loss events.
Looking ahead, Dolan sees room for growth in cyber, property, and casualty lines. Many cyber insurance buyers have yet to fully grasp their exposure or adjust coverage limits. Property insurance is likely to draw more business into E&S after major catastrophes, while casualty insurance remains challenging but offers opportunities for sustained growth.
However, Dolan warns of potential challenges. Increased regulatory oversight could limit how quickly the E&S market responds. Also, too much investment and capacity might push prices too low, disrupting market balance and profitability.
For wholesale brokers, success will depend on strong cooperation with carriers and smart use of data and analytics. Real-time data will be key to adjusting coverage and pricing effectively in a fast-changing environment. Although entering the E&S market is fairly easy, staying competitive requires experience and sophistication.
Dolan sums up the outlook by saying the E&S market is becoming a crucial part of the insurance world. It meets today’s fast-paced and unpredictable risk landscape with flexible, timely solutions, and he and his team at Liberty Mutual are committed to this growing sector.