The excess and surplus lines market experienced a notable slowdown in premium growth in the first nine months of 2025, following years of robust expansion, with year-over-year premium increases dropping to 9.7% through the third quarter, according to a new analysis from AM Best.

The smaller increase in year-over-year premium growth in the first nine months of the year compares with 13.5% in the same period of 2024, 15.5% in 2023 and 20.5% in 2022, the report said.

Competitive pressures across specific risk classes and lines of coverage are driving the more modest premium growth, even as surplus lines carriers continue to absorb complex risks that traditional admitted carriers have increasingly sidestepped, the report said. The market is witnessing a fundamental shift in which types of risks migrate to the E&S sector, particularly in commercial property, cyber, and directors and officers liability — areas where specialized carriers have developed creative solutions in recent years.

The transition reflects a broader market realignment, according to AM Best.

“These changes have influenced both distribution and product strategies,” said David Blades, associate director, AM Best. “One such example is capacity for catastrophe-exposed property coverage, an area in which surplus lines carriers have been able to offer flexibility and customization for those kinds of risks that no longer fit standard underwriting frameworks.”

This positioning has allowed the E&S market to maintain its multiyear growth trajectory despite overall premium expansion moderating considerably.

New Players and Consolidation Reshape Leadership

Nine of the 10 largest surplus lines writers expanded their business in the first nine months of 2025, with Berkshire Hathaway as the only exception, posting a 12.4% decline in direct premiums written compared to the prior year. However, six of the nine expanding carriers saw their growth confined to single-digit percentage increases — a marked pullback from historical performance levels, the report said.

Notable shifts occurred within the industry hierarchy. MS&AD US Insurance Group surged into the top 10 rankings at number nine, fueled by a 42.6% increase in surplus lines premium growth primarily derived from program business ceded to unaffiliated reinsurers. Meanwhile, AXIS US Operations dropped out of the quarter’s top 10 after the previous year’s ranking.

Fronting companies and hybrid-fronting operations have emerged as significant growth engines, Am Best said. MS&AD, Accelerant US Holdings, Obsidian Insurance Group, and Sutton National Group — all fronting or hybrid models — achieved double-digit premium growth by leveraging partnerships with managing general agents.

Beazley USA Insurance Group, ranked 22nd among surplus lines writers based on direct premiums written through Q3, nearly tripled its premium through a strategic shift that moved business from its Lloyd’s syndicate to Beazley Excess and Surplus Insurance, with an emphasis on specialty lines including health care, environmental, and D&O liability, along with cyber and property coverage, according to the report.

Tightening Regulations and Rate Softening Set Near-Term Outlook

The acceleration by fronting companies brings added complexity, as regulatory scrutiny has intensified around collateral requirements and oversight for these market participants, AM Best said. This evolving regulatory environment coincides with early rate softening in cyber and D&O liability — segments where E&S carriers have historically competed aggressively.

AM Best’s analysis suggests the surplus lines insurance market faces a period of slower, more measured premium growth as the market normalizes. The combination of selective capacity deployment, competitive pricing pressures, and mounting operational requirements for newer market participants points toward a near-term flattening of surplus lines expansion.

Obtain the full report here. &