US Surplus Lines Premiums Exceed $100 Billion in 2023, Surpassing Milestone

The US surplus lines market reached a significant milestone in 2023, with direct premiums written (DPW) exceeding $100 billion for the first time, reaching a record $115.6 billion, according to an A.M. Best report. This represented a 17.4 percent increase over the prior year, continuing a trend of double-digit growth in the segment since 2018.

A.M. Best's Market Segment Report, Improved Underwriting and Operating Results Sustain US Surplus Lines Market Momentum, attributes the growth to increased submission flow from distribution partners, market dislocation due to heightened climate risks, and rising inflation impacting property repairs. Admitted insurers, particularly in areas prone to extreme weather, have reduced their risk appetite, creating new opportunities for nonadmitted insurers to expand their presence.

The report highlights that surplus lines insurers have capitalized on rising prices in commercial lines, using their expertise to absorb more difficult risks. By the end of 2023, surplus lines DPW accounted for 23.8 percent of the property and casualty industry's total commercial lines DPW.

"The surplus lines market's resilience has been marked by insurers' ability to withstand tumultuous times by adjusting strategies, innovating solutions, and modifying enterprise risk management principles," said David Blades, associate director of Industry Research and Analytics at A.M. Best.

Notably, the Lloyd's market saw the largest increase, with the 86 syndicates writing US surplus lines business growing their premiums by 28.8 percent in 2023. Domestic professional surplus lines insurers also improved their combined ratio to 90.0, significantly outperforming the property-casualty industry's ratio of 101.5.

Mr. Blades added that new distribution partnerships, including managing general agents and delegated underwriting authority enterprises, have further contributed to the sector's growth by enabling surplus lines groups to defend and expand their market positions.

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