US Surplus Lines Market Sees Strong Premium Growth in 2024 Amid P&C Challenges

AM Best’s recent report reveals continued robust growth in the US surplus lines market, particularly driven by non-admitted insurers. In 2024, premiums rose by 12.1% year-over-year across 15 state service and stamping offices, marking a 28.8% increase over the past three years. This surge highlights increased demand in the property and casualty (P&C) sector amidst ongoing macroeconomic challenges post-pandemic.

Key states such as California, Florida, Texas, and New York dominate the surplus lines premium landscape, reflecting concentrated market activity in these regions. The report underscores that severe weather events, including California’s early 2025 wildfires along with heavy rains and mudslides, have pressured admitted insurers to limit risk exposures, particularly in homeowners and commercial property lines.

Surplus lines insurers have capitalized on this environment by leveraging their flexible underwriting capacity, resulting in premiums for surplus lines homeowners’ coverage more than doubling from $1 billion in 2018 to $2.2 billion in 2023. Despite this growth, the homeowners segment remains a smaller piece of the overall surplus lines market but significantly contributes to consistent premium increases.

General liability coverage maintains the largest share of direct premiums within the surplus lines market. Early 2024 data indicates a nearly 10% worsening in the net incurred loss ratio for "other liability (occurrence)" coverages, signaling increased claims costs and underwriting challenges.

Looking ahead, California’s property market faces continued pressures, likely prompting admitted market capacity contraction. This dynamic sets the stage for surplus lines insurers to fill critical capacity gaps, reinforcing their expanding role in addressing risk transfer needs that admitted insurers are increasingly reluctant to underwrite.

Overall, AM Best’s findings highlight the growing strategic importance of the surplus lines market in the US P&C insurance landscape, particularly as traditional insurers respond to evolving risk environments and regulatory challenges. Market watchers should note the interplay between regulatory frameworks, catastrophic risk events, and insurer risk appetite shaping this sector’s trajectory.