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E&S growth is reshaping insurance strategies

AXA XL expands its wholesale solutions to address today’s toughest risks 

The excess and surplus (E&S) lines market is no newcomer. It’s been around since the early 1900’s, and became more prominent in the 1970s, providing coverage for risks that the standard, admitted market couldn’t accommodate. But over the past several years, E&S has gone from a specialist’s niche to one of the fastest-growing segments in the U.S. property and casualty industry.

In 2018, total E&S premium volume reached $50 billion — a milestone that took more than 100 years to achieve. Just seven years later, that number has surged to roughly $135 billion, more than doubling in less than a decade and growing at a rate far outpacing the overall insurance market.

Three forces are driving this shift:

1. The world is riskier.

Property and Casualty — the two largest lines in E&S — have both seen loss volatility spike. On the casualty side, social inflation, legal system abuse and other litigation trends are pushing jury awards in excess liability cases to unprecedented levels. In 2024, out of the 135 lawsuits against a corporate defendant that resulted in a nuclear verdict (those that surpass $10 million), 49 were considered “thermonuclear verdicts,” exceeding $100 million in awards.

Property lines are equally pressured. Catastrophe losses are at record highs, with so-called “secondary” perils like severe convective storms now producing losses on par with primary perils. The Texas power grid failure during a winter storm, widespread hail events and other high-severity weather have all underscored the volatility. For insurers, these trends demand more pricing flexibility and coverage customization than the admitted market can typically offer.

2. Admitted market constraints.

In the admitted market, carriers must get approval for their rates and policy forms by regulators. That process can take months or years — a mismatch for risks that evolve far more quickly. As a result, admitted carriers can be limited in their ability to respond to loss trends with adequate pricing or tailored coverage.

By contrast, E&S carriers operate with freedom of rate and form. They can price risks to reflect current realities and craft forms to fit unique exposures. That flexibility is one of the biggest drivers of submission flow into the E&S market, particularly in high-risk property and casualty placements.

3. Wholesale brokers add lasting value.

The wholesale channel itself has evolved. As more business has flowed into E&S, wholesale brokers have invested in talent, technology and market access to better serve retail brokers and insureds. These capabilities make them an essential link between clients and carriers.

That added value also means E&S business is more likely to stay in the channel, even when market cycles soften. Large carriers like AXA XL now operate in both admitted and E&S markets, reducing the incentive to pull business back to the admitted side once terms and pricing improve.

Closing the protection gap

E&S isn’t just a market alternative. It’s a market necessity. When admitted carriers restrict capacity or narrow terms because a risk is no longer profitable under approved pricing and terms, E&S steps in. Without it, many businesses and homeowners would be left uninsured, creating a protection gap with wide-ranging economic impacts.

From covering high-hazard industrial operations to protecting homes in catastrophe-prone regions, E&S plays a vital role in keeping risk transferable and the broader economy moving.

What brokers and clients need most from E&S partners

In a market where volatility is the norm, brokers and insureds are looking for E&S partners who can deliver creatively and who can approach challenges with solutions. That starts with a clearly defined underwriting appetite and accessible points of entry, so submissions are targeted and turnaround times improve. It also means bringing speed and creativity to complex placements that admitted markets can’t address, while maintaining a strong commitment to the wholesale channel and building lasting relationships with insureds.

Many carriers are refining their approach to meet these expectations. At AXA XL, for example, a long-standing presence in E&S has been sharpened with the creation of a dedicated wholesale E&S vertical — with its own underwriting team, appetite and go-to-market strategy.

This structure is built around four priorities: a clear and consistent appetite broad enough for true E&S risks, a distinct identity in the market, unwavering support for wholesale partners, and targeted talent investments to service expected growth. These priorities mirror what the wholesale community values most: expertise, responsiveness and the ability to craft solutions where standard markets can’t.

By Tim Whisler |Head of Wholesale Solutions, AXA XL