The Ultimate Guide to Excess and Surplus Lines Market in 2026

The excess and surplus lines market hit $115 billion in direct written premium in 2025, nearly doubling from $60.2 billion in 2019. That six-year growth trajectory reflects a fundamental restructuring of the U.S. P&C insurance landscape, not a cyclical blip. Admitted carriers are shedding volatile risk classes. Social inflation is driving $10 million+ jury verdicts in routine auto liability cases. Climate-related losses topped $100 billion for the fourth consecutive year. Every one of those pressures pushes business from the admitted market into the excess and surplus lines market.

This guide covers the market's structure, growth drivers, carrier landscape, product lines, and what agencies need to position themselves in 2026.

Key Takeaways

• The E&S market reached $115 billion DWP in 2025, representing 18% of total U.S. commercial P&C premium, up from 11% in 2019, per WSIA Market Report 2025
• Lloyd's of London is the single largest surplus lines writer in the U.S. with approximately $18 billion in U.S. surplus lines premium
• The top 25 E&S carrier groups write 72% of total surplus lines premium, according to WSIA 2025 data
• Property and casualty are the two largest E&S product lines, together accounting for approximately 52% of surplus lines premium
• AM Best reports the E&S market's combined ratio averaged 91.5% from 2020-2025, outperforming the admitted market's 99.8%
• California, Florida, and Texas account for 38% of all surplus lines premium, driven by catastrophe exposure, per WSIA state-by-state premium data

Market Structure: How the E&S Market Operates

The excess and surplus lines market operates parallel to the admitted market with distinct regulatory treatment.

Regulatory framework. E&S carriers are not admitted (licensed) in the states where they write business. They are exempt from rate filing, policy form approval, and state guaranty fund participation. In exchange, policyholders sacrifice guaranty fund protection, and brokers must complete diligent search documentation proving the admitted market cannot accommodate the risk.

Distribution. E&S business flows through licensed surplus lines brokers. Three distribution channels dominate:

Regulation. While E&S carriers avoid admitted market regulations, they are not unregulated. States monitor the E&S market through surplus lines stamping offices (15 states), surplus lines tax filings, NAIC Quarterly Listings for alien insurers, and minimum capital and surplus requirements ($4.5 million in most states).

Market Size and Growth Trajectory

The E&S market's growth since 2019 is the most significant structural shift in U.S. P&C insurance in decades.

Growth is moderating from the 2020-2021 peak but remains above the admitted market's 2-3% annual growth. AM Best projects the E&S market will reach $125-$130 billion by 2027.

Growth Drivers: Why E&S Keeps Expanding

Five structural forces push business into the E&S market.

1. Climate-related losses. U.S. insured catastrophe losses exceeded $100 billion annually from 2022-2025. Admitted carriers responded by restricting homeowners coverage in California (State Farm, Allstate non-renewing policies), reducing coastal property capacity in Florida, and tightening wildfire and convective storm appetite nationwide. Displaced risk flows to the E&S market.

2. Social inflation. Nuclear jury verdicts (awards exceeding $10 million) increased 385% between 2014 and 2025. Admitted carriers cannot price this volatility within filed rate structures. Commercial auto, general liability, and products liability are the most affected lines.

3. Emerging risk classes. Cannabis (legal in 24 states for recreational use), cryptocurrency businesses, autonomous vehicles, and AI-related professional liability have no established loss data. Admitted carriers with rate-filing obligations cannot price these classes. E&S carriers can.

4. Capacity withdrawal. Admitted carriers are actively withdrawing from volatile lines. Chubb reduced public company D&O capacity by 30% in 2024. Hartford exited certain contractor classes. Liberty Mutual non-renewed commercial property accounts in catastrophe zones. Each withdrawal creates E&S market opportunity.

5. Rate flexibility. E&S carriers adjust rates immediately based on emerging data. Admitted carriers face 6-18 month regulatory lag for rate changes. In a rapidly shifting loss environment, E&S rate flexibility is a competitive advantage for both carriers and policyholders.

Carrier Landscape: Top E&S Writers

The E&S market is concentrated among large, well-capitalized carrier groups.

Lloyd's of London leads with approximately $18 billion in U.S. surplus lines premium across 50+ active syndicates. Lloyd's operates as a marketplace where individual syndicates underwrite specific risk classes.

Domestic E&S leaders (by 2025 DWP):

• Lexington Insurance (AIG): approximately $6.5 billion
• Scottsdale Insurance (Nationwide): approximately $4.2 billion
• Markel Corporation: approximately $3.8 billion
• Kingsway Financial: approximately $2.9 billion
• Colony Insurance (Argo): approximately $2.1 billion

Bermuda market: Bermuda-based carriers (Arch Capital, RenaissanceRe, Everest Re) provide significant surplus lines capacity, particularly for property catastrophe and excess casualty.

AM Best financial strength: 92% of the top 50 E&S carriers hold AM Best ratings of A- (Excellent) or better. Financial stability in the E&S market has improved consistently since 2010.

Product Lines: Where E&S Premium Concentrates

E&S premium distributes across commercial product lines. No single line dominates; the market is diversified.

Agency Strategy: Capturing E&S Market Growth

Agencies that build E&S capabilities position themselves for the market's continued expansion.

Step 1: Evaluate your book for E&S opportunities. Review every admitted market declination from the past 12 months. Identify accounts that were lost because your agency lacked E&S market access. A mid-size agency typically identifies $200,000-$500,000 in annual premium that could have been retained through E&S placement.

Step 2: Establish wholesale relationships. Build relationships with 3-5 wholesale brokers covering your target lines. Submit consistently, provide complete applications, and follow up on every quote. The wholesale relationship improves with volume and submission quality over time.

Step 3: Build E&S expertise. Train producers on surplus lines basics: when to use the E&S market, how to explain non-admitted coverage to clients, and how surplus lines tax works. CPCU and CIC coursework covers E&S market fundamentals. WSIA also offers E&S-specific training programs.

Step 4: Invest in submission quality. E&S underwriters review every submission individually. Complete ACORD applications, 5-year loss runs, risk narratives, and supplemental information accelerate quotes and improve terms. Agencies with clean, complete submissions get quoted 40% faster than those submitting incomplete packages.

Step 5: Track E&S performance metrics. Monitor submission-to-quote ratio, quote-to-bind ratio, average premium per E&S account, and commission income from E&S placements quarterly.

E&S Market Access Paths for Retail Agencies

Retail agencies without their own surplus lines license have three practical paths to E&S market access.

Path 1: Wholesale broker submission. Submit the risk to a wholesale broker who handles E&S placement, compliance, and tax filing. Wholesale brokers charge a commission split (typically 10-15% to the retail broker on the net premium). This is the most common path for mid-size retail agencies.

Path 2: MGA partnership. Some MGAs issue E&S policies directly through program binding authority. The retail agency deals with the MGA rather than a surplus lines broker. This simplifies the transaction but limits market access to the MGA's specific programs.

Path 3: Self-directed surplus lines. The retail agency obtains a surplus lines license in the states where it operates. This path requires compliance infrastructure: diligent search documentation, surplus lines tax filings, and stamping office compliance in states that require it. Best suited for agencies with $500K+ in annual E&S premium.

Each path involves trade-offs between speed, cost, control, and compliance burden. Most retail agencies below $50M in total premium benefit most from the wholesale broker path.

Wholesale Broker Selection Criteria

Choosing the right wholesale broker affects your E&S placement success more than any other single factor.

Carrier panel breadth. Top wholesale brokers access 200+ E&S carriers. Verify that your wholesaler's panel includes the specific markets relevant to your risk classes. A wholesaler strong in property but weak in casualty creates gaps.

Specialty market access. For complex risks (cyber, environmental, marine, aviation), verify the wholesaler's specialty team depth. Some wholesale brokers have dedicated specialty teams that maintain direct underwriter relationships. Others route everything through a general submissions team.

Submission turnaround standards. Ask each wholesaler for their average time-to-first-quote by risk class. Top wholesalers commit to 24-48 hour turnaround on standard commercial submissions and 3-5 business day turnaround on complex specialty risks.

Compliance support. Surplus lines tax rates vary by state (0%-6%), and filing requirements differ across 50 states. A wholesale broker with in-house compliance staff reduces your administrative burden and protects you from filing errors that create regulatory violations.

FAQ

What is an excess and surplus lines carrier?

An excess and surplus lines carrier is an insurance company that writes coverage for risks the admitted market cannot or will not insure. The carrier is not admitted (licensed) in the policyholder's state but is authorized to write surplus lines business through state eligibility lists and NAIC listings. E&S carriers have rate-making freedom and are exempt from state rate filing requirements.

What is excess and surplus lines?

Excess and surplus lines is the segment of the insurance market that provides coverage outside the admitted (standard) market. "Excess" refers to limits above what admitted carriers will deploy. "Surplus" refers to the additional market capacity for risks the admitted market declines. The E&S market wrote $115 billion in 2025 DWP, representing 18% of total U.S. commercial P&C premium.

What is an excess and surplus lines policy?

An excess and surplus lines policy is an insurance contract issued by a non-admitted carrier. The policy covers risks that admitted carriers declined or cannot accommodate. E&S policies are not backed by state guaranty funds. Policy forms may be non-standard (not ISO-based), giving carriers flexibility to customize coverage terms. Surplus lines tax (1.5%-6%) applies to the premium.

What does the AM Best excess and surplus lines report show?

The AM Best excess and surplus lines report (published annually) tracks E&S market performance including DWP growth, combined ratios, carrier financial strength, and market share data. The 2025 report shows the E&S market achieved a 91.5% average combined ratio from 2020-2025, significantly outperforming the admitted market. The report is the industry's primary data source for E&S market analysis.

Can you sell excess and surplus insurance lines?

Yes, if you work through a licensed surplus lines broker. Retail agents do not need their own surplus lines license to sell E&S coverage. You submit the risk to a wholesale surplus lines broker who handles placement and compliance. If you want to place E&S business directly, you need a surplus lines license in the relevant states and infrastructure to handle diligent search documentation and tax filing.

What are excess and surplus lines in insurance?

Excess and surplus lines in insurance represent coverage provided by non-admitted carriers for risks outside the standard (admitted) market. The segment exists because some risks are too volatile, unique, or large for admitted carriers to write within their filed rate structures. The E&S market provides rate flexibility, specialized expertise, and capacity that the admitted market cannot match for these risks.

Written by Javier Sanz, Founder of BrokerageAudit. Last updated April 2026.

Capture more E&S market opportunity with BrokerageAudit's submission intake system. Explore Submission Intake.