US E&S Insurers Experience Continued Strong Growth

Direct written premiums for US excess and surplus (E&S) insurers saw a sixth consecutive year of double-digit growth, according to Fitch Ratings' latest annual market review for the property and casualty (P&C) sector. In 2023, E&S insurers recorded a 15 percent increase in direct written premiums, more than double the 7 percent growth for the broader US P&C insurance market. This marks the 13th straight year of premium growth, with 6 of those years experiencing double-digit increases.

The surge in E&S premiums, which began in 2018, has now elevated the E&S market to represent 9 percent of the total P&C insurance industry, which is up from a steady 5 percent in previous years. Doug Pawlowski, senior director at Fitch Ratings, attributed the significant growth to several factors, including "admitted markets shedding unprofitable, volatile business, the high cost of reinsurance, and adverse loss cost trends due to persistent inflation." He also highlighted that premium growth in property lines from catastrophe-prone states played a significant role in sustaining this momentum.

While property insurance lines were the primary driver of growth, liability insurance also contributed to the rise in premiums, with the exception of the other liability (claims made) line of business, which experienced a contraction. In recent years, E&S premium growth has been more consistently spread across all major product lines, but the trend shifted in 2023 to focus more on property.

Mr. Pawlowski noted that premium growth is expected to continue through a combination of higher prices and greater policy volume, although it may be less uniform across different lines of business.