S&P: E&S market growth slowing as segment faces headwinds in 2025

By David Bull

June 12 - (The Insurer) - S&P Global Market Intelligence has highlighted “additional headwinds” in the domestic U.S. E&S market after reporting a slowdown in the segment’s premium growth to 13.4% in 2024, three years after peaking at 32.3%.

In its latest report on the segment, S&P Global Market Intelligence said E&S premiums increased by at least double digits for a sixth consecutive year in 2024, but the rate of increase declined from 14.6% in 2023.

The report said that E&S premiums accounted for 9.5% of U.S. total direct premiums written in 2024, up from 9.1% in the previous year and 5.7% in 2019.

Homeowners E&S premiums rose by 45.2% in 2024 to $3.2 billion, from $2.2 billion in 2023. The report said that the increase was largely driven by growth in the California market, where the state’s domestic E&S homeowners premiums surged by 86.0% year on year to $962.1 million.

The report also highlighted the 22.4% growth in the E&S commercial auto market in 2024, noting that admitted market carriers continued to “tread cautiously” in a business line that is confronting the challenges of social inflation.

Looking ahead, S&P Global Market Intelligence said that the California market is likely to be an exception to top-line headwinds in 2025 amid the fallout from the January wildfires.

Tim Zawacki, principal insurance analyst at S&P Global Market Intelligence, said the E&S market continues to grow at a faster pace than the U.S. P&C industry as a whole, even as the rate of expansion slowed last year.

“More broadly, however, national growth in the residential and commercial property lines moderated in 2024, increasing by 15.4% compared to the over 20% year-over-year growth rate observed in each of the previous five years.

“Weakness in commercial property rates in catastrophe-exposed geographies could lead to a continued slowing in the E&S market’s expansion in 2025,” he said.