Explosive Growth: The Excess and Surplus (E&S) Market is on Fire
Surprises aren’t rare in the insurance world, but few sectors are seeing the kind of momentum that’s roaring through the excess and surplus (E&S) market. In the past few years, the E&S sector has transformed from a niche backstop into the star player on the field. Carriers can’t keep up with demand. Investors are flocking in. Why does this market keep growing while standard insurance struggles? The answers point to fast-changing risks, new business opportunities, and a fresh approach to coverage. If you want to understand where the real action is today, keep your eye on E&S.
Why the E&S Market is Outpacing Traditional Insurance
E&S insurance stands apart because it picks up the tough jobs that standard insurers walk away from. While typical carriers stick to tried-and-true risks, E&S fills the gaps for the odd, the risky, or the brand new. Over the past decade, this corner of the market has been growing much faster than the rest.
Traditional carriers now face more losses, especially as disasters grow more severe and cyber threats explode. As a result, many insurers are pulling back from riskier areas—property in hurricane zones, new tech businesses, or high-hazard operations. That’s where E&S steps in.
A recent industry report showed that E&S premiums in the US cleared $98 billion in 2022, up from just $50 billion five years before. This isn’t just steady growth—it’s a surge. More brokers and clients are looking to E&S every day.
Photo by Jakub Zerdzicki
Unique Flexibility of E&S Carriers
What drives this growth? E&S carriers don’t play by the same rulebook as admitted carriers. They aren’t bound to use state-approved forms or rates. This means faster responses and tailored solutions for unusual risks.
If your business faces fast-changing exposures or needs a custom policy, E&S answers with speed and options. Standard insurance often takes months and delivers cookie-cutter policies. By contrast, E&S underwriters can turn around quotes quickly and craft coverage for risks as unique as your business.
Key Sectors Fueling Growth
Three market segments are feeding the E&S boom:
- Property catastrophe: Catastrophic wind, wildfire, and flood risks are tough to price and volatile to cover. Standard carriers have pulled back, opening the door wide for E&S providers.
- Cyber liability: Cyber attacks spike every year, and traditional insurers are wary. E&S providers write creative policies and respond to new threats quickly.
- Construction: Projects with unique designs or tight deadlines often can’t get standard coverage. E&S carriers offer flexible solutions that keep building moving.
These sectors are only the tip of the iceberg. As new risks keep appearing, the E&S appetite keeps growing too.
Market Expansion by the Numbers
Recent industry data shows just how hot the E&S market is:
- US E&S direct written premiums hit $98.5 billion in 2022, up 20% over the previous year.
- In the last five years, growth in E&S premiums has more than doubled the pace of standard commercial lines.
- Roughly 15% of US commercial property/casualty premium now sits in the E&S sector.
- Key states like California, Florida, and Texas have seen the sharpest shifts as standard markets retreat.
If you want proof of the trend, just follow the money and the new capacity flooding in.
Opportunities and Hurdles in the Scaling E&S Market
With big growth come new doors to open—and a few obstacles. The E&S market is flush with new risks and capacity, but also faces more rules and rising competition.
Riding the Wave of New Risks
E&S leaders are thriving by covering risks no one imagined 10 years ago. From climate-driven disasters to crypto hacks, they follow the action and write policies that the standard market can’t.
Example: After Hurricane Ian hammered Florida, many standard property carriers pulled back or stopped writing new policies. E&S carriers stepped in, using flexible pricing and new data tools to write policies other insurers would not touch. The speed at which they adapted left competitors scrambling.
Cyber insurance follows a similar pattern. Most admitted carriers are wary of the fast-changing threat. E&S underwriters update policies and raise limits almost overnight—helping clients stay protected where others only see chaos.
Regulatory Nuances and Compliance Maze
E&S insurers aren’t filed with state insurance departments, which allows for quick changes, but brings other complications. Brokers must follow the “diligent search” process—proving clients tried to find coverage in the standard market first.
Each state has its own rules for surplus lines. That means compliance headaches as your E&S book grows. Agents and brokers must keep careful records, be ready for audits, and learn to navigate the patchwork of state taxes and filing requirements.
Competition, Technology, and Smart Growth
New players and capital are flooding the E&S market. Technology is rewriting the underwriting playbook. Predictive analytics, data scraping, and risk modeling speed up decision-making and let carriers keep a sharper eye on changing trends.
Insurtech companies and large investors now see the E&S market as a place where fast moves and smart tools can win big. Carriers are building digital quoting tools, automating compliance checks, and making it easier for brokers to place tough risks. Those who combine experience with data are leading the charge.
Conclusion
The E&S market is on a hot streak and shows little sign of cooling off. While admitted carriers pull back, E&S steps forward with agility and confidence, filling the gaps and finding new profits in the process. For brokers, agents, carriers, and investors, the message is clear: this is a time of big opportunity.
If you want to ride the next wave in insurance, look to the E&S sector. Creative thinking, fast adaptation, and a hunger for the unknown have made this segment the go-to for tomorrow’s most interesting risks.
Stay curious, stay flexible, and the growth in the E&S market can work for you too.