Growth of the E&S Market

How big will E&S markets be in a decade?

E&S has been growing at a rapid rate. The Wholesale & Speciality Insurance Association reports that E&S premiums have been growing consistently at a double digit rate, with 2021 premiums accelerating to 22% growth Y/Y.

How does this look compared to the overall P/C market? Pulling data from the Insurance Information Institute, we see that P/C premiums have been increasing around 4% every year excluding 3 of the past 10 years, with 2020’s 2% growth a 10 year low due to the pandemic.

When you overlay these two data sets over each other, however, you see a revealing trend showing the increasing growth of the E&S market, become a larger and larger percentage of the entire P/C market.

We can call out some of the top reasons driving this trend:

  • increasing cyber intrusions and the growing interest across industries for cyber policies
  • social inflation - 2019 showed a 300% increase in frequency of verdicts of $20m compared to 2001 to 2010
  • changing climate have caused admitted carriers to revaluate their risk across many states

With this in mind - will admitted carriers continue to cut back on their capacity and non-renew accounts? In a decade, will E&S become a double digit player in the overall P/C market?

Although only time will tell, it appears that there is only more risk on the horizon and the non-admitted market's increasing premium volume may only be the beginning of a much bigger trend in our industry.