The U.S. excess and surplus lines (E&S) insurance market witnessed a notable 14.5% increase in direct premiums written in 2023, as reported by S&P Global, signaling a slight deceleration from previous years’ higher growth rates.
Despite this moderation, E&S premiums now constitute a substantial 9.2% share of the total U.S. insurance market, up significantly from 5.2% in 2018, underscoring the growing importance of this sector.
Tim Zawacki, insurance sector strategist at S&P Global Market Intelligence, anticipates a continued slowdown in the growth of U.S. excess and surplus lines premiums in 2024. He emphasized the market’s pivotal role in providing essential capacity across various business lines, classes, and geographical areas amid the current cycle.
Robust Growth in E&S Market
The U.S. excess and surplus lines (E&S) insurance market has shown robust growth in recent years, although the pace eased in 2023, according to S&P. Direct premiums written for E&S increased by 14.5% to $86.47 billion last year, following growth rates of 32.3% in 2021 and 20.1% in 2022.
The majority of E&S premiums in 2023 were concentrated in liability and casualty coverages, comprising 52.5% of the total. Property lines made up 31.7% of E&S premiums, while commercial auto accounted for 5.4%.
S&P’s data highlighted the leading E&S insurers by direct premiums written in 2023, with Berkshire Hathaway at $8.39 billion, American International Group at $4.96 billion, and Fairfax Financial at $4.04 billion.
Property Lines: Challenges and Opportunities
S&P noted a significant shift in property premiums to the E&S market, driven by withdrawals from catastrophe-exposed markets in the admitted insurance sector. Timothy Turner of Ryan Specialty Holdings Inc. attributed this trend to heightened property losses, particularly from wildfires and hurricanes affecting coastal and Midwest regions.
States such as South Carolina, California, and Louisiana have seen substantial increases in E&S property premiums as a percentage of their total property market since 2018, according to S&P. This trend underscores the growing role of E&S insurers in managing catastrophic risks.
Nationally, U.S. E&S property direct premiums reached $27.44 billion in 2023, marking a robust 41% year-over-year increase and nearly doubling their market share from 2018 to 11.1% of the total property premiums.
Liability Lines: Continued Expansion
In 2023, E&S liability premiums expanded to $45.40 billion, a 4.2% increase year-over-year. Although growth has moderated compared to previous years, E&S now commands a substantial 35% share of total U.S. liability premiums, up from 26% in 2018.
Among liability lines, other liability (occurrence) witnessed notable growth in 2023, with premiums rising by 11.6% to $25.29 billion. The largest segments within other liability premiums included commercial general liability, commercial excess & umbrella, errors & omissions, and cyber insurance.
The evolving landscape of the U.S. excess and surplus lines insurance market reflects its increasing role in addressing diverse and evolving risks across the insurance industry.
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