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In This List
Research
US E&S Insurance Market Report: Growth slows for excess and surplus market
Video
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* 20 Jun, 2024
US E&S INSURANCE MARKET REPORT: GROWTH SLOWS FOR EXCESS AND SURPLUS MARKET
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* Share
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* Author Jason Woleben
* Theme Financial Services
* Tags Fintech
The rate of growth in US excess and surplus lines premium volume continued to
slow in 2023, but the market's importance to the property and casualty sector
has never been higher, according to an analysis by S&P Global Market
Intelligence.
➤ S&P Global Market Intelligence's 2024 US Excess & Surplus Insurance Market
Report finds that the growth rate of US excess and surplus (E&S) direct premiums
rose 14.5% in 2023, down from the peak year-over-year increase of 32.3% in 2021
and 20.1% in 2022. The US E&S market now constitutes 9.2% of the country's total
direct premiums written in 2023, up from the 5.2% market share for 2018. For
more discussion on what we consider to be E&S business, please see the
methodology note at the end of this article.
➤ A combination of three commercial property lines and homeowners
insurance direct premiums surged to $27.44 billion in 2023, a year-over-year
increase of roughly 41%. This marks the fifth straight year that aggregate
premiums in the property lines have grown by at least 20%, with the 25.1%
increase in 2020 being the previous high. Rising reinsurance costs and limited
appetite among admitted carriers to write business in catastrophe-prone states
drove premium dollars into the E&S property market in 2023.
➤ The aggregated premiums in several liability lines, consisting of the
as-reported lines of product, medical professional liability and "other," grew
by only 4.2% in 2023, the first time in five years the total liability lines did
not grow by double digits. The combined liability lines reported $45.40 billion
in direct premiums, equating to roughly half (52.5%) of the total US E&S direct
premiums in 2023.
The US-domiciled E&S market increased 14.5% in 2023, down from the peak
year-over-year increase of 32.3% in 2021 and 20.1% in 2022. E&S direct premiums
written totaled $86.47 billion during the most recent year compared to $75.51
billion in 2022. The bulk of E&S premiums in 2023 were written within various
liability or casualty coverages (52.5%), several property lines of business
(31.7%) and commercial auto (5.4%).
The largest individual writer of E&S business in 2023 was Berkshire Hathaway
Inc. with its reported $8.39 billion in direct premiums, followed by American
International Group Inc. and Fairfax Financial Holdings Limited with $4.96
billion and $4.04 billion, respectively.
In total, E&S premiums constituted 9.2% of the country's total direct premiums
written in 2023, compared to 8.8% in the prior year and 5.2% at the end of 2018.
Property lines
The property E&S market has seen material growth in recent years as the admitted
insurance market has pulled back or exited markets that have the potential for
high catastrophe losses due to wildfires and hurricanes.
Timothy Turner, president of wholesale E&S-focused distributor Ryan Specialty
Holdings Inc., noted during its year-end 2023 earnings call that a combination
of higher loss activity, higher reinsurance costs and retentions of risk,
persistent inflation and ongoing focus on insurance to value make for a
challenging property market, which is driving premium dollars into the E&S
market.
Turner believes premiums transferring into the specialty market will remain
there due to "heightened frequency and severity of property losses, particularly
in coastal areas, and more recently in the Midwest."
The number of hurricanes or tropical cyclones is less frequent; however, they
have fueled outsized losses compared to more numerous convective severe storms
the industry has faced in recent years. According to the National Oceanic and
Atmospheric Administration's National Center for Environmental Information, the
number of economic losses from severe storms that exceeded $1 billion has been
trending higher in recent years. NOAA reported a record high number of those
storms at 19 with $55 billion in economic losses in 2023.
For our state-specific analysis, we combined commercial property (fire, allied
lines and commercial multi-peril (non-liability)) and homeowners line of
business into a total property rollup, as several of the commercial business
lines include personal property risks.
While the statutory data does not allow differentiation between commercial or
personal risks within the data, it is apparent that the E&S market is taking on
an outside role within the property business lines in certain states.
Three states have seen their share of the E&S premiums against the total
property market grow by more than 8 percentage points since 2018. South Carolina
is up 9.0 percentage points to 19.4% of the market. California rose 8.8
percentage points and now stands at 14.2% in the state, while Louisiana grew 8.3
percentage points, making E&S premiums 22.7% of the total property market in
2023. Louisiana has the largest share of E&S premiums to the state's total in
the nation, closely followed by Florida.
E&S premiums accounted for 21.1% of the property lines direct premiums written
in Florida in 2023, up 7.1 percentage points from 2018. The E&S figures exclude
its state-backed insurer of last resort, Citizens Property Insurance Corp.,
the largest property insurer in the state, as the company is licensed to do
business in the state.
In total, the US E&S property direct premiums grew to $27.44 billion in 2023, a
year-over-year increase of roughly 41%, which marks the fifth straight year that
aggregate premiums in the property lines have grown by at least 20%. The
five-year period's previous high was set in 2020 with a 25.1% year-over-year
increase.
E&S premiums now account for 11.1% of the nation's total property premiums,
almost double its share of the market in 2018.
Berkshire was the market leader in 2023 with $4.08 billion in total direct
premiums written across the four individual business lines. It was the only
company to be ranked within the top three largest writers in each of the
separate lines of business.
Liability lines
The four combined as-reported liability lines of business accounted for roughly
half the total of E&S premiums in 2023. In aggregate, the liability lines
reported $45.40 billion in direct premiums during the year, up 4.2% from the
prior year's total. For the first time in five years, the total liability lines,
consisting of the as-reported lines of product, medical professional and "other"
liability, year-over-year premiums did not grow by double digits in 2023.
Overall, the aggregated E&S liability business lines premiums accounted for
roughly 35% of the collective market share of total premiums written within the
lines in 2023, an increase of less than 1 percentage point from the prior year
and up 9.0 percentage points from 2018.
The change in year-over-year premiums varies greatly among the various business
lines, with other liability (claims-made) the only line reporting lower premiums
than the previous year. The premiums in the business line were $14.70 billion in
2023, a decrease from $15.78 billion in the prior year. On the other hand, other
liability (occurrence) grew 11.6% in 2023 to $25.29 billion. Among the four
casualty lines, this was the only line that grew by double digits during the
year.
The other liability business lines reported within regulatory statements include
numerous subtypes of insurance such as directors and officers, completed
operations, errors and omissions, environmental liability, commercial excess,
and umbrella. A new Exhibit of Other Liabilities by Line of Business will now
provide a breakout of direct premiums written and direct paid and unpaid losses
to offer greater details into a reported business line that covers a diverse set
of risks.
A review of 173 predominately US E&S subsidiaries reported $38.22 billion in
reported premiums in the other liability business line. The total may include
admitted premiums if the insurance subsidiary is licensed in any specific state.
The largest share was in commercial general liability, which accounted for
roughly 29.3% of the reported total. This was followed by commercial excess and
umbrella at 28.1%, errors and omissions at 13.3%, and internet and cyber
liability at 7.7%.
Among the remaining two liability lines, medical professional liability E&S
direct premiums grew to $3.21 billion in 2023, an increase of 6.9% from the
previous year. E&S premiums accounted for 26.3% of the total medical
professional liability market in 2023.
Product liability E&S direct premiums grew 3.1% year over year in 2023, pushing
its business line premiums to $2.20 billion. Among the four reported liability
lines, product liability E&S premiums had the largest market share, which was
42.4% of the total market in 2023.
Methodology
E&S results are derived from an S&P Global Market Intelligence template that
scans Schedule T of annual and quarterly statutory statements for individual
entities to identify those companies that list their status as "not licensed,"
"eligible surplus lines" or "domestic surplus lines insurer." They exclude those
entities whose active status in a particular geography shows as "licensed or
chartered," "non-domiciled risk-retention group," or "qualified or accredited
reinsurer."
Data is limited to US filers and excludes so-called alien surplus lines
insurers.
This article was published by S&P Global Market Intelligence and not by S&P
Global Ratings, which is a separately managed division of S&P Global.
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* Theme
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* Tags
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