An estimated 34% of U.S. commercial business is placed in the excess & surplus market, with the U.S. surplus lines market producing more than $115 billion in premium in 2023, according to Amwins' “State of the Market—2025 Outlook." The growth trajectory of the E&S market has been significant over the past six years, with premiums growing by double digits, the report says. Further, what's even more notable is that the market has been growing unabated over the past 20 years.

The hard market is among the causes of the growth of a market that had previously been considered a safety valve for the admitted market.

“There has been a shift in how carriers want to price risks and align their capital with risk," says Kevin Doyle, CEO of Risk Placement Services Inc. (RPS). “When you boil all that down, the big trend that we've seen over the last four or five years is continued flow into the E&S world. I don't see that slowing down anytime soon."

“There are trends that we're seeing in the overall marketplace that aren't necessarily specific to the E&S market but have had an impact on the E&S marketplace," says David Nelson, executive vice president, E&S wholesale, Nationwide. “There's been a marked increase in the frequency and severity of catastrophic events since 2017. Most recently, we saw the impact of Hurricane Milton and Helene that rolled through Florida but also created flooding in North Carolina, as well as the wildfires in California—not a day goes by that we don't see a potential storm impacting the marketplace."

As extreme weather events increase and catastrophe risk spreads to new areas, growth within the E&S property sector has been significant.

“The difference is the actual insurable risks that lie in the path of all those potential CAT exposures where people historically didn't have as much of an exposure," Doyle says.

Further, in the casualty sector, “there is growing complexity around casualty business due to legal environment challenges," says Lynanne St. Denis, chief underwriting officer wholesale, Navigators, a brand of The Hartford. “With all that, we are finding that more business is being placed in, and staying in, the E&S channel."

“We're seeing improved underwriting results specific to the E&S market," Nelson says. “It's strong, with continuing growth of the E&S market expected in 2025 and into 2026."

“New entrants have increased available capacity in the market for the past few years," St. Denis explains. “However, we are still seeing disciplined limit deployment in excess casualty, as well as pressure to increase primary general liability and auto attachment points."

Capacity remains for the E&S casualty sector for now, but “we're seeing limit shortening and carriers starting to revisit where their attachments are, particularly on excess casualty," Nelson says.

Another reason the E&S market has experienced notable growth has been its capacity to implement innovation. “Companies are innovating quicker, and the standard market can't keep up with the pace of new exposures," St. Denis says. “Regulatory hurdles in the standard market create challenges for admitted insurers to keep up with loss trends."

As a result, “there is increased reliance on the E&S market where the standard market is unable to provide meaningful capacity, making the risk hard to place with an admitted solution," St. Denis says.

As the market follows capacity, an important factor in E&S is the insurer's financial stability—especially since state guaranty funds don't cover E&S policies, according to the Insurance Information Institute (Triple-I).

With the lack of coverage in the admitted market, “I see no slowdown in E&S growth and in the E&S share of the whole insurance market in the near future," St. Denis says. “With the acceleration of innovative products and services into the economy, the E&S market will be an increasingly vital partner to provide the needed financial backstop to cover new types of risks and exposures that haven't been contemplated before."

Olivia Overman is IA content editor.