Excess and surplus lines: the insurance market for risks the standard market will not write.

TL;DR

• Excess and surplus (E&S) lines is the part of the US insurance market for risks the standard, admitted market will not write — because the risk is unusual, the capacity is not available, or the admitted market rate is too low to be viable.
• E&S carriers are not licensed (admitted) in the states where they sell policies. They operate under a separate regulatory framework that gives them flexibility on rates and policy forms.
• To place a risk in the E&S market, a retail broker typically has to use a licensed surplus lines broker, who must first show that the admitted market was genuinely tried and declined.
• In 2024, US surplus lines premium topped $81 billion — up 12.1% on the year before. A decade ago it was a fraction of that.
• The largest E&S writers are Lloyd's of London, Berkshire Hathaway Specialty, AIG, Markel, RSUI, Nautilus, and Markel-owned units. The market is concentrated: the top three writers hold about one-third of total premium.

What "admitted" and "non-admitted" mean

Every US state licenses insurance carriers. A carrier that has been licensed — and that files its rates and forms with the state regulator — is called admitted. Admitted carriers have to charge rates the regulator has approved. They have to use policy language the regulator has reviewed. And if they go bankrupt, policyholders are protected by the state guaranty fund.

Non-admitted carriers — also called surplus lines carriers — are not licensed in the state where the policy is sold. They are licensed somewhere, usually in a domicile state or at Lloyd's, but they operate outside the admitted framework in the state where the risk sits. That means:

• They can set their own rates without state-by-state approval.
• They can write policy forms that are not available in the admitted market.
• Policyholders are not covered by the state guaranty fund if the carrier becomes insolvent.

The trade-off is direct: more flexibility in exchange for less protection. That flexibility is exactly why hard-to-place risks end up here.

The risks that land in E&S

Three categories of risk drive the E&S market.

Nonstandard underwriting characteristics. A wood-frame bed and breakfast on the Florida coast, last hit by a hurricane ten years ago, with a claims history. An admitted carrier applies its filed rates, looks at the exposure, and declines. The risk is real, but it does not fit neatly into the pricing model for standard commercial property.

No admitted product available. In 2015, very few admitted carriers had a filed policy form for cannabis businesses. The admitted market simply did not offer the product. Cannabis dispensaries, cultivators, and distributors went to E&S by necessity. Commercial drone fleets are a similar story today — the risk profile is still being understood, and admitted markets are thin.

Capacity. A company that needs $500 million in cyber coverage cannot always find that limit in the admitted market. E&S carriers and Lloyd's syndicates can stack limits in ways the admitted market cannot match.

In 2024, commercial liability and commercial property were the two largest E&S lines, representing about 70% of stamping office premium. Personal lines — homeowners in wildfire or hurricane zones — account for just under 5% of E&S premium overall, though that share is growing fast in California and Texas.

How a risk gets placed in E&S

A business cannot call an E&S carrier directly. The chain works like this.

A retail broker — the agent the business deals with — tries the admitted market first. Most US states require a licensed surplus lines broker to document that the admitted market was genuinely approached and declined. This is called the diligent search or diligent effort requirement. The number of declinations required varies by state, but the principle is the same: E&S is a safety valve, not a first stop.

Once the admitted market declines, the retail broker goes to a wholesale broker. Wholesale brokers specialise in placing non-standard risk. They know which E&S markets are open to which risk types, and they have direct relationships with the underwriters.

The wholesale broker works with a licensed surplus lines broker — sometimes the same firm — who has a special licence in the state where the risk sits. When the policy is placed, a surplus lines stamp is applied. The stamp is issued by the state surplus lines association or stamping office. In most states, the stamping office — Texas, California, Florida, Illinois, and others have their own — reviews the placement, confirms the diligent search was done, and collects the premium tax that the policyholder owes to the state. That tax is typically 2–5% of premium, on top of the policy cost.

Why E&S premium has grown sharply

In 2012, US E&S premium was roughly $30 billion. By 2022 it was $91 billion by some measures, and stamping office data — which covers about 63% of the market — put 2024 premium at $81 billion. The 12.1% growth in 2024 followed 14.6% growth in 2023 and 24% growth in 2022.

The growth reflects two things happening at the same time.

First, admitted carriers have withdrawn from volatile lines. Florida homeowners, California wildfire, and commercial property in areas with high catastrophe exposure have all seen admitted carriers leave or reduce capacity sharply over the last several years. When admitted capacity shrinks, risks move to E&S.

Second, new risk categories have emerged with no admitted product. Cyber liability, cannabis, gig-economy liability, drone operations, and certain newer forms of professional liability have all grown through the E&S market because the admitted market was not ready to price them. The E&S market's freedom from rate filings means underwriters can build and reprice a product quickly, well before a state regulator would approve an admitted form.

Fitch Ratings has documented five consecutive years of double-digit E&S premium growth through 2022. Lloyd's of London holds roughly 18% of the US E&S market. Berkshire Hathaway holds about 8%, and AIG roughly 5%. Together the top three account for about one-third of all E&S premium. The top 15 writers account for nearly two-thirds.

The big E&S writers

The US E&S market has a recognisable cast of repeat players.

Lloyd's of London is the largest single E&S underwriter in the US by premium volume. It is not a company but a market of syndicates, each capitalised separately. Its ability to pool capacity across many syndicates makes it the go-to market for very large or unusual risks.

Berkshire Hathaway Specialty Insurance moved to the number two spot after Berkshire's 2022 acquisition of Alleghany, which brought in several E&S platforms at once. Berkshire's capital base is unmatched, which lets it take on large limits where other markets cannot follow.

AIG (through Lexington Insurance, its surplus lines unit) has been a top-three E&S writer for decades. Lexington is one of the oldest and largest dedicated E&S carriers in the US.

Markel operates in E&S across multiple product lines and geographies, with particular strength in specialty casualty and professional liability.

RSUI (a Resolute Investment Managers company) focuses on casualty and property E&S, primarily through the wholesale broker channel.

Nautilus Insurance Group (a W.R. Berkley company) writes admitted and non-admitted commercial lines, with a strong E&S book in general liability and commercial property.

Kinsale Capital Group is a newer name but grew rapidly through the E&S market on the strength of its underwriting discipline — it posted a combined ratio of 75.6 in 2022, one of the best in the sector.

On the technology and distribution side, platforms like Joyn Insurance, Convr, and Boost Insurance have built tools to help MGAs and wholesale brokers underwrite and distribute E&S business faster — automating parts of the submission, pricing, and placement workflow that traditionally ran by email and spreadsheet.

What it means in practice

If you are a broker trying to place an unusual risk, E&S is not a failure. It is a market that was built exactly for your situation.

The cost will be higher than an admitted policy, for the same reason a custom suit costs more than one off the rack. The carrier is taking on a risk without the benefit of a large book of identical exposures to price against. The underwriter has more discretion, which cuts both ways: they can often cover something the admitted market will not touch, but they can also reprice or non-renew at the next renewal with less regulatory constraint than an admitted carrier.

And the guaranty fund protection is absent. If the E&S carrier becomes insolvent, the policyholder does not have the backstop that admitted market buyers have. For large commercial buyers, that means the financial strength of the E&S carrier — not just the coverage terms — is part of the due diligence.