From: Fitch Ratings

The U.S. excess and surplus (E&S) insurance market is expected to post a second consecutive year of direct underwriting profits in light of high demand and a continued favorable pricing environment. Nearly all lines are reporting double-digit growth in direct written premiums from a combination of higher prices and greater policy volume, Fitch Ratings says.

Recent growth is attributable to admitted markets shedding business falling outside of their risk appetite to the E&S market. A current example of this is homeowners business in catastrophe-prone states, such as California and Florida. Hard market pricing remained a tailwind, driving premium growth across all segments, balanced against growing loss costs given the inflationary environment.

The non-admitted market provides an alternative to the standard market, writing unique and hard to place risks. E&S underwriters are typically licensed in their domicile states and unlicensed, but authorized to write non-admitted business, in other states. Customers requiring custom coverage, or coverage structured in a specific way, will find more options in the E&S market.

Direct statutory premiums written in the E&S market reached $91 billion in 2022, approaching 9% of total property/casualty (P/C) industry premium. E&S historically accounted for approximately 5% of total P/C premium before the growth spurt started in earnest in 2018.