Bigger Piece of the Pie: Surplus Lines Market Hits New Record as Specialty Lines Continue to Grow in Prominence, Market Share

Whatever line of business, the surplus lines industry continues to play a critical and more prominent role in the property/casualty market.

“It’s pretty incredible to have watched what the E&S business has become today from the days when I started in this business almost 40 years ago,” said industry veteran John Jennings, CEO and one of the founding members of Jencap Group. “It is a major segment of our business, and it is an incredibly agile system within the insurance industry, that has performed extremely well and has filled many holes over the last 10 years, with some impressive growth.”

Matt Lynch, president of binding at Risk Placement Services Inc., recalled his days in college where he earned an insurance and risk management degree. Back then the excess and surplus lines sector encompassed just one chapter in an insurance textbook.

“Now they dedicate entire courses on the E&S market,” he said. “Fifteen years ago, the E&S sector was just 10% of the industry. Right now, it’s about 20% to 25%.” That’s exciting for RPS, he added. “We’re really bullish on this marketplace and are excited about the opportunities ahead.”

According to AM Best’s Annual Surplus Lines Report, in 2000 the E&S sector accounted for just 3.6% of total property/casualty premium; today that market share stands at 12.3% in 2024. When singling out property/casualty commercial lines premium, that figure jumps to 25.7% market share.

The reason: The world is a risky place.

“The complexity of risks today and what those risks will become in the future secures market prominence for E&S,” said Neil Kessler, CEO of Specialty and Benefits at CRC. “Look, I don’t think the world’s getting less risky. So, as the complexity continues to increase and the options on the admitted side continue to decrease, you’re going to need people, specialists, to help navigate the non-admitted part of the world. And that’s where we excel.”

Demand for Specialty Coverage

In today’s market, the demand for specialty coverage and expertise remains strong even as property insurance, professional liability, and cyber insurance see new capacity and more competition in the specialty market.

That pattern of the insurance market cycle is different than the past, said Sam Baig, president of Amwins Brokerage. “Traditionally, when markets have become more competitive, you see a slowdown in submissions, but we’re not seeing that,” he said. “We’re actually seeing elevated submission activity.”

Other wholesalers interviewed for this story say they are experiencing the same, and they do not expect that trend to slow in 2026.

“We continue to see strong submission count increases, strong policy count increases,” Kessler said. Of course, market factors influence rates and pricing, but even while softening prices in areas such as property saw significant declines this year, he said there continued to be a strong demand when measuring policy count growth.

Tim Turner, CEO of Ryan Specialty and chairman of RT Specialty, said that Ryan Specialty is seeing double-digit increases in premium and expects that will continue through 2025. Ryan Specialty anticipates the organization will write more than $30 billion in premium by the end of 2025. “I think that the surplus lines market will continue to grow. It will continue to take additional market share from the admitted market,” Turner added.

“The E&S or non-admitted marketplace is here to stay,” said Paul G. Smith, corporate senior vice president at H.W. Kaufman Group/Burns & Wilcox. “Over the last five years, the market has proven its value by creating the correct rates [and] the correct policy terms and conditions that the admitted marketplace struggles to find in this very difficult environment that we’re in,” he said. He added that the role the surplus lines market now plays is vital in providing solutions for clients, capital providers, and the changing or emerging exposures that new and specialty risks face.

Market Outlook

E&S specialists see a varied market, with plenty of niche opportunities in 2026.

While property insurance rates softened in some regions throughout 2024, other regions are still finding challenges, RPS’s Lynch noted. “We’re still seeing rate increases in some spots. If you think about habitational, it’s still a distressed situation.”

So, while there’s opportunities for rate decreases on certain risks, other lines of business are continuing to struggle to find options.

Turner said social and human services, which encompasses everything from hospitals to nursing homes to assisted living to allied health facilities, are other areas experiencing tough market challenges today. “That segment of business is just getting harder by the day,” he said.

Another newer sector experiencing “niche firming” is public entity and municipality business. “Those risks are pouring into the E&S market now,” he added. Also, anything that’s long-tail, high-hazard casualty is going to stay in E&S, he added.

Amwins’ Baig said that just about anything with wheels tends to be challenging, especially in the excess liability space.

“Fleet exposures, tough construction, hospitality accounts–they’re all under pressure,” he said. “You’re seeing increases of 10% to 15% across our California portfolio when it comes to excess liability, with a much more difficult market with people reducing their line sizes and being more selective on the accounts.”

“But the property market is competitive as ever,” Baig added. “There’s an abundance of capacity, pressure, downward pressure on rates and premium levels, and an expansion of terms and conditions.” Of course, there are outliers depending on the class of business and the performance of an account, he added. But in general, he sees property rate reductions.

Another area of the market that continues to be competitive is cyber liability and professional liability. That may change soon, he predicts.

“We think professional liability is close to bottoming out, especially in D&O and cyber,” Baig noted. “You’re starting to see those rates flatten and less pressure.”

For now, the cyber and directors and officers markets remain soft, with rate declines in the single-digit to low-double-digit range, according to a recent Aon report, “Q2 2025 Global Insurance Market Insights.” Aon noted that in these lines, some clients can secure higher limits or find better terms at no additional cost.

Marsh also reported similar trends in its Global Insurance Market Index released in July, noting that financial and professional lines rates in the U.S. remained flat on average in the first half of 2025. Marsh noted that cyber insurance rates in the U.S. decreased 3% during the same time, which marked the ninth consecutive quarter of rate reductions.

Pricing Outlook

While surplus lines professionals may face some headwinds from insurance pricing fatigue, E&S brokers predict another busy year for specialty lines in 2026.

Ryan Specialty’s Turner said change is imminent in the property insurance world in 2026. Softening rates in property could be one storm away from a market change in the other direction, he said.

“We’re getting close to the bottom in Tier 1 property, and we think that change is on the horizon.” It’s much more up and down than casualty business, he said. “Global warming will continue to have an impact on these catastrophic losses, and the property losses in aggregate will continue to mount and grow; there will be larger losses coming.”

Casualty pricing is a different story. “In general, the casualty market in E&S will remain firm through 2026, and especially in the 10 to 20 verticals that most of that business travels through,” he said.

“We’re all witnessing this acceleration of loss cost adjustment factors,” Turner said. Claim frequency and severity are record-breaking, and those trends continue to be affected by the overall U.S. litigation climate, he added.

“On certain classes of casualty business, you have to keep raising prices and tightening terms as a result of that,” he said. “All the big insurance companies, the head of the claims, they’re under probably the most pressure of anyone in the industry right now because they can’t litigate. They can’t go to trial as much as they’d like to because of [the risk of] nuclear verdicts. They’re everywhere.”

Nuclear verdicts, defined as jury awards exceeding $10 million, rose by 52% in 2024, according to a recent Sedgwick report, “Liability Litigation Observation and Trends.” Thermonuclear verdicts, those that exceed $100 million in jury awards, increased 81.5% between 2023 and 2024.

“It’s become very difficult to achieve a level of fairness in the judicial environment; it’s lopsided,” Turner said. “I definitely see it as the biggest factor in casualty in North America.”

Topics Trends Excess Surplus