The U.S. excess and surplus (E&S) insurance market is experiencing remarkable growth, changing how insurers and brokers operate. This shift has turned E&S from a last-resort option into a vital part of risk management strategies for businesses.
Recent trends show that market dislocation, new risks, and the flexibility of non-admitted insurance have driven this change. Industry experts believe this growth will stabilize but not disappear, urging brokers to adapt to seize new opportunities.
Kyle Burnett, who leads E&S property at Swiss Re Corporate Solutions, noted that a series of significant weather events, including hurricanes Harvey, Irma, and Maria, highlighted the admitted market’s limitations. These disasters, along with ongoing issues like wildfires and rising costs, created a prime situation for E&S to demonstrate its ability to respond quickly and effectively.
Burnett emphasized that E&S is no longer just a fallback option. It has become a crucial part of the future of insurance. Michael Price, CEO of Dellwood Insurance Group, pointed out that E&S markets offer more freedom in setting rates and coverage compared to admitted markets, which must comply with numerous regulations. This flexibility is becoming increasingly important as insurers face unpredictable loss costs.
Both Burnett and Price agree that while the recent surge in E&S growth may slow down, it is sustainable. They observe that submissions to E&S are still growing at double-digit rates, although fluctuations between different types of insurance will impact overall volume.
Geographically, there are new opportunities for growth. Burnett sees potential in areas that were not traditionally considered high-risk, especially east of Tornado Alley, where severe storms are becoming more common. Price highlighted smaller property accounts, which are less competitive and require more infrastructure to manage, as another area ripe for growth.
Despite a current abundance of capacity in the property market, fueled by fewer major hurricanes recently, both leaders caution that this can change quickly. They stress that while competition is beneficial, it’s important to maintain discipline in underwriting practices to ensure stability.
The E&S market is also becoming more vital in casualty lines due to rising social inflation and litigation trends. Price noted that loss trends in casualty are expected to remain high, presenting opportunities for underwriters who are careful and strategic.
Looking ahead, both Burnett and Price emphasize the importance of disciplined underwriting as a foundation for sustainable growth in E&S. They encourage brokers to deepen their expertise and strengthen relationships within the wholesale market to thrive in this evolving landscape.
In summary, the E&S market is on a strong upward trajectory, driven by the need for flexibility and responsiveness in an unpredictable environment. As brokers and insurers adapt to these changes, the focus remains on maintaining discipline and understanding the unique dynamics of the market.