CRC: E&S personal lines market stabilizes in 2025 after underwriting improvements

By Mia MacGregor

March 31 - (The Insurer) - Corrective actions, including a push for rate increases, have stabilized the personal lines market in 2025, according to a market report from CRC Group.

Wholesale broker CRC said that "many personal lines carriers persevered over these last tumultuous years" despite escalating losses. The wholesale broker noted the improving underwriting performance and said the once-stagnant segment had transformed into a data-driven, results-oriented industry.

"An aggressive push for rate over the past couple years has led to improved underwriting performance in 2025," the report said.

CRC also highlighted that the reinsurance market restabilized last year in response to tightened capacity, improved performance and increased rates.

However, the report warned that active hurricane and wildfire seasons may drive up costs again in 2025, and true reinsurance relief is expected to be at least a year away.

"Important buzz words for brokers and MGAs in 2025 include profitability, portfolio diversification, accountability, and complete submissions," the report said.

COASTAL PROPERTY RATES COULD DECREASE

Coastal property market rates are flat but CRC said they could decrease throughout 2025 as more competition enters.

“Some admitted markets are re-entering or loosening underwriting guidelines in hopes of writing more coastal business, which has not been the case in recent years,” the report said.

Louisiana rates have softened by 15% to 20% while deductibles have decreased from 5 to 3%. CRC also identified “steady rates or slight decreases” across the board in others states including South Carolina and Georgia although wind deductibles have increased in those states.

“The coastal Florida wind deductibles are shifting down a bit, and 10% WH is becoming a thing of the past,” the report added. Admitted markets are re-entering this space in Florida, often undercutting E&S prices.

In the high-value homeowners market, CRC said that “carriers who were hesitant to provide capacity in 2023 and/or 2024 are ready to play in 2025.” This is resulting in less coparticipation on large property lines in 2025 compared to 2023 and 2024.

“Replacement cost and ITV are less of a concern in 2025 since most carriers have already taken corrective action over the last few years and also apply inflation percentage at renewal. Unlike past market cycles, terms are not wavering,” the report said.

In Florida, markets are willing to provide larger limits for the over $10 million space.

CRC said that rates are not yet dropping in the Northeast but have plateaued following several years of rate increases on renewals.

The downsized umbrella market of 2023 and 2024 is expected to remain, CRC said with the remaining markets typically offering maximum limits of $5 million.

“Carriers are less interested in putting up large excess lines due to the litigious nature of U.S. personal umbrella business,” the report said, adding that very few carriers are willing to write non-admitted personal umbrella business on a mono-line basis in the U.S.

LA WILDFIRES TO FORCE MORE INSUREDS INTO E&S MARKET

For wildfire business, nonadmitted carriers are expanding guidelines and increasing maximum TIVs to capitalize on the admitted carriers that are leaving these areas in record numbers.

“California has seen a record number of non-renewals from some of their largest admitted markets. This leaves a large hole in the market for high, mid, and low value homes flooding the nonadmitted market with opportunity,” the report said. “This should persist through 2025 as admitted carriers are cutting their market shares in high wildfire in all states and sending more non-renewals than ever seen on existing risks.”

In light of recent wildfires, tightening is anticipated around Los Angeles and Southern California areas or homes considered to be at the edge of a community.

The California FAIR plan likely cannot increase TIVs. This will force more insureds into the E&S market, and cause California rates to rise.

“It’s likely that the minimum rate in mid-2025 will hover around 45 cents in true suburban or metro areas. In more rural California areas insureds may see 57 – 60 cent rate,” the report said.

In outlook for the vacant property market is much more optimistic than it was a year ago, CRC said.

“Overall, there continues to be a trajectory toward recovery in 2025. Pricing has become more stable, but the personal lines insurance marketplace still has a challenging landscape in almost every region of the country,” the report said.