Excess and Surplus Lines Market Growth Showing Signs of Moderating

After years of significant growth, the flow of business from admitted insurers to the US excess and surplus (E&S) lines market showed signs of slowing in 2025, according to AM Best.

E&S market premiums increased 9.7 percent during the third quarter of 2025, down from a 13.5 percent increase during the same period a year earlier, AM Best said.

"Although market premiums have been affected by increasing levels of competition for certain risk classes and lines of coverage, surplus lines insurers have continued a multiyear surge, absorbing complex risks that admitted [insurers] have increasingly eschewed in property, commercial auto, and high hazard casualty lines," an AM Best statement said.

The lower growth during the third quarter of 2025 also reflected competitive market pressures within certain insurance lines, such as commercial property, cyber, and directors and officers liability, AM Best said. Despite the slower pace of growth in 2025, however, the surplus lines market continues to evolve and is positioned to handle a greater number of risks in specific classes better suited to E&S, according to the rating agency.

"These changes have influenced both distribution and product strategies," David Blades, associate director at AM Best, said in the statement. "One such example is capacity for catastrophe-exposed property coverage, an area in which surplus lines [insurers] have been able to offer flexibility and customization for those kinds of risks that no longer fit standard underwriting frameworks."

AM Best said that most accounts that have moved into the E&S market are underwritten in a manner reflecting the exposures, with customized policy conditions and rates that are commensurate with the risk, demonstrating the core competencies of surplus lines insurers.

Still, some E&S premium growth in recent years has been driven by newer market entrants, the rating agency said, including fronting companies that are explicitly striving to grow their market share in surplus lines and specialty commercial markets.

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