Excess and surplus lines (E&S) have experienced growth for five consecutive years, marked by double-digit percentage increases. This trend is attributed to solid underwriting results driving operating profitability due to new risks and reduced capacity in admitted markets. These insights are part of the Insurance Information Institute’s (Triple-I) latest issues brief, "Excess and Surplus: State of the Risk."

"By meeting the insurance needs of risks with lower claim frequency and higher claim severity, the E&S lines have seen significant growth, though the trend of expansion appears to be slowing down a bit," said Dale Porfilio, Triple-I’s chief insurance officer.

The E&S market's growth is particularly notable in areas such as liability, fire, earthquake, flood, and ocean marine insurance. Since 2018, this segment has seen its share of total property lines direct premiums written increase significantly in Florida, California, and Louisiana—three markets facing risk crises.

Analysts had projected continued growth for the E&S market in 2020. Estimates suggested that total premiums could reach up to $125.9 billion by 2027 at a compound annual growth rate (CAGR) of 15.2%. However, sustaining this level of top-line growth depends on various factors including regulatory flexibility. The E&S market may be sensitive to regulatory changes given political shifts affecting 85 out of 99 state legislative chambers in the U.S.

Massive court verdicts also present both opportunities and challenges for E&S. Since the pandemic began, large verdict amounts have increased from $1.1 billion in 2020 to $7.3 billion in 2022.