Fitch Ratings, a credit rating agency and provider of financial research, reported that the US excess and surplus (E&S) insurance market continued its remarkable growth streak in 2024, with direct written premiums rising 11 percent.
Although this was below the 15 percent expansion recorded in 2023, Fitch emphasised that the sector once again outpaced the broader US property and casualty (P&C) market, which grew by 8 percent.
Fitch noted that this marks the fourteenth consecutive year of expansion for E&S insurers and the seventh year in a row of gains above 10 percent.
According to Fitch, the E&S sector’s share of the total P&C market has nearly doubled since 2017, climbing from about 5 percent to 9 percent in both 2023 and 2024.
The agency expects that share could rise further, potentially reaching 12 percent in the next several years, but Fitch does not anticipate a lasting increase beyond that level unless major changes occur in property pricing or liability trends. Growth in 2024, Fitch explained, was broad across lines of business, with strong results in liability, property, commercial auto, and medical professional liability.
Fitch underscored that underwriting performance also remained superior to the overall P&C industry. E&S insurers recorded a direct combined ratio of 88 percent in 2024, compared with 95 percent for the broader market.
Although this was modestly weaker than the 86 percent ratio achieved in 2023, Fitch stressed that profitability remains far ahead of the five-year E&S average of 97 percent.
Property lines were particularly profitable, with a combined ratio of 67 percent, compared with 103 percent for casualty. Fitch observed that this was the third straight year in which the E&S segment outperformed the industry in underwriting profitability.
The agency attributed continued momentum to several forces, including the withdrawal of admitted carriers from volatile or unprofitable risks, rising casualty loss costs, and increased demand for tailored coverage addressing complex exposures.
Fitch also pointed to business shifting out of admitted property markets, especially in catastrophe-prone regions, as well as the migration of high-net-worth homeowners’ business into the E&S space. The agency cautioned that the growing role of managing general agents and fronting arrangements is increasing competition and putting pressure on rates, even as it expands distribution.
Fitch emphasised that while many US insurers with agency ratings participate meaningfully in E&S, none rely exclusively on the segment.
The agency expects underwriting margins to narrow somewhat in 2025 but still remain profitable and stronger than the P&C industry as a whole, provided catastrophe activity is not unusually severe. Fitch believes ongoing strength in casualty pricing may offset easing property rates, though liability exposures—especially other liability-occurrence—remain vulnerable to social inflation and unfavourable reserve development.
In Fitch’s assessment, the E&S market produced nearly $117 billion in statutory premiums in 2024, an increase of 10 percent from 2023 when including Lloyd’s of London.
The agency concluded that E&S is firmly positioned as a lasting and profitable component of the US insurance sector, with expanded underwriting capabilities and products designed for emerging risks ensuring its continued importance as a complement to the admitted market.
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