"This comes at a time where the inflationary environment continues to make it difficult to properly insure to value in property lines as well as project ultimate losses in longer-tailed casualty lines," Fitch Senior Director Douglas Pawlowski said in a release. Credit: Nuthawut/Adobe Stock
The U.S. excess and surplus market is anticipated to see its second consecutive year of direct underwriting profits, according to Fitch Ratings, which reported nearly all lines are seeing double-digit premium growth due to higher prices.
"This comes at a time where the inflationary environment continues to make it difficult to properly insure to value in property lines as well as project ultimate losses in longer-tailed casualty lines," Fitch Senior Director Douglas Pawlowski said in a release.
In addition to favorable pricing trends, the E&S market is seeing more demand as admitted carriers adjust their risk appetites for certain lines and regions.
Fitch Ratings noted this is clearly demonstrated in the home insurance markets of catastrophe-prone states such as California and Florida. The E&S sector will continue to play an important role in delivering capacity to these markets as admitted carriers grapple with growing loss expectations and regulators continue putting downward pressure on rates.
E&S premiums reached $91 billion in 2022, a year in which the sector accounted for more than 8% of the total U.S. P&C industry's premiums. During the year, the E&S market's direct combined ratio was around 96%, which was better than the overall P&C market, according to Fitch Ratings.
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