Excess and surplus lines premium growth remains positive but will continue to slow as commercial property insurance rates decline, according to a report issued Thursday by Fitch Ratings.
U.S. E&S direct written premiums increased 11% in 2024, less than the 15% increase the prior year, but more than the 8% rise seen in the overall U.S. property/casualty industry, Fitch said.
It was the 14th consecutive year of premium growth and the seventh year in a row of double-digit premium growth for the E&S market.
Premium growth was positive across all lines, with other liability occurrence, allied and fire lines, commercial auto and medical professional liability seeing double-digit increases, while other liability claims made and commercial multiperil reported low single-digit growth.
The E&S market accounts for 9% of the total property/casualty industry, nearly double its share in 2017 following a period of outsized growth.
E&S market share will continue to increase but is expected to peak at 12% over the coming years, unless major reforms are made to address social inflation and property rates in key markets, Fitch said.
E&S underwriting performance is expected to decline slightly but stay profitable and somewhat better than the standard property/casualty market in 2025, barring severe catastrophe losses.
“Pricing weaknesses in property will be offset by rate momentum in casualty,” Fitch said.
E&S insurers reported an 88% direct combined ratio for 2024, compared to a 95% combined ratio for the total P/C market. This was the third consecutive year that E&S reported better underwriting results than the overall property/casualty industry.