Amwins: E&S property marketplace has become ‘extremely competitive’

By David Bull

April 28 - (The Insurer) - Carriers and MGAs are “heavily focused” on account retention and premium growth in the E&S property market, driving “extremely competitive” conditions, according to Amwins.

In a state of the market report on the segment, the wholesaler said participants on property insurance programs have been forced to become more flexible with pricing, deductibles, terms, conditions and policy forms.

They are responding to “meaningful” amounts of capacity being offered by new carriers and MGA entrants, in addition to increased line sizes and appetite from incumbents, the company added.

There is also a greater willingness to write single-peril covers, including named windstorm, than in recent years.

The update, co-authored by several members of Amwins’ property leadership across the U.S., Bermuda and London, added that competition within the property space had already increased meaningfully throughout 2024.

This was driven by a wave of new carrier and MGA entrants, combined with many companies rolling out new products, establishing new facilities or programs and increased appetite or line sizes from carriers.

“That trend has continued into 2025. For example, we have seen select U.S. carriers and Lloyds syndicates re-enter the primary layer multifamily space after sitting on the sidelines for the past several years while other carriers are finding lower attachment points, larger line sizes and/or participation within multiple layers to now be within target,” said the report.

Amwins said that soft market conditions showed no signs of stabilising in March or through the first half of April.

“Common sentiment is that this is one of the most rapid erosions of property market conditions in decades,” said the intermediary.

As supply of capacity outweighs demand and as carriers and MGAs attempt to hit account retention and premium goals set by their management teams, this downward trend is expected to continue.

Evidence of these market dynamics can be seen in renewals for loss-affected accounts that in many instances achieved rate decreases in Q1, said Amwins.

“Incumbent carriers are fighting hard to retain their renewals and are now more commonly adjusting pricing as necessary to secure renewal orders, with layered and shared accounts often subscribed by 150% to more than 200% in some or all layers.

“Pressure on terms and conditions is simultaneously increasing, including a heavy focus on deductibles, blanket limits, expansion of coverage in general, a return to program concurrency and the removal of restrictive provisions,” said the wholesaler.

Meanwhile, insurance rates remain competitive for wildfire-exposed business despite increasing activity, driven by significant capacity from Lloyd’s and domestic E&S markets.

Amwins also commented on the potential impact of tariffs on the E&S property sector, with early indicators pointing to a negative effect.

The company said downstream effects on E&S property could include higher construction costs and replacement costs leading to a greater need for more accurate property valuations, potential for larger claims payouts and disruption of supply chains (see boxout).

Elevated business interruption exposures could arise from the increasing cost of supplies and consumer goods as well as rising raw material costs.

The report also looked at the facultative reinsurance market, which tends to closely follow the dynamics of the wholesale market, with sustained pressure on pricing as well as terms and conditions.

Amwins said reinsurers continue to be actively engaged to get onto placements, offering solutions that bring “meaningful benefits” and can be useful for buyers looking to manage challenging carve-outs for high hazard locations and perils.

“Leveraging facultative reinsurance provides strategic value when placing property coverage – despite the soft market. We’re seeing markets capitalise on this to enhance line sizes — specifically to address increased cat or fire limits on placements,” said the report.

LONDON AND BERMUDA APPETITE

The update highlighted London market conditions that remain competitive as underwriters have “quickly adapted to softening conditions”.

Amwins noted that while most syndicates and companies in London say they did not expect the “unprecedented” pace of softening, the general view is that the current rating environment continues to support a margin of profitability.

The broker said that the practice of leveraging new syndicate or company market pricing to reduce pricing from incumbents is regularly being deployed to achieve required rate reductions, while last-minute reductions in quoted pricing to secure firm orders are also becoming more widespread.

Although accounts with substantial losses in 2024 are obtaining some rate increases, most loss-affected accounts are pricing flat or even seeing rate reductions. Valuation discussions could come back to the fore as the market assesses the impact of U.S. tariffs on areas such as lumber pricing, Amwins suggested.

The company highlighted increased follow form automatic capacity from its own Amplify in-house facility as well as the Ki algorithmic syndicate and Insurex, which provides capacity behind the Inigo and Atrium syndicates.

“Very few classes of business are off limits, and there is no sign that the new business flow is slowing down. London remains a market eager to retain and even grow its footprint in the E&S marketplace,” the report said.

Amwins said that several Bermuda markets have budgeted rate reductions since the start of the year and are now being pressured to reduce rates further.

The island’s market for U.S. property tends to focus on cat-heavy buffer layers with line sizes of $5 million to $15 million, or attaching in excess of probable maximum loss with large line sizes from $25 million to $600 million, the company observed.

“Heavy cat accounts that received significant discounts over the past one to two years are experiencing further rate reductions. When dealing with long-term incumbents, Bermuda markets may also reduce line sizes in order to maintain relationships with core accounts,” the report continued.