The Perfect Storm Driving Record-Level Growth
Last year’s macro-economic hurdles may have dampened MGAs/MGUs and retail insurance agencies’ success, but 2024 was a boon for wholesalers. Despite increased catastrophe events and rising settlement costs driving heightened liability claims and volatility in underwriting performance, the excess and surplus (E&S) insurance lines market surpassed $81 billion in 2024 – up 12%. Over the past five years, the E&S market expanded at an annual growth rate of 21%, surpassing $104 billion in premiums in 2023, according to a recent Conning report.
“We’re definitely in growth mode,” said Philadelphia Insurance Companies (PHYL) Assistant Vice President Stephen Decker in an interview with Best’s Review. “In the last five years, we’ve seen double-digit growth in the E&S marketplace year over year.”
Traditionally referred to as the ‘safety valve’ of the industry, the E&S market has provided capacity and creative solutions in challenging times. But a growing number of businesses which used to be standard market staples are now being handled by surplus lines carriers, due to the flexibility that the surplus lines market provides in evaluating risk. During the Best’s Review interview, Nationwide Senior Vice President of Contract P&C and Excess Nationwide E&S/Specialty John Anthony noted an influx of costal-exposed businesses and severe convective-storm exposed businesses being serviced by surplus lines carriers, as standard carriers continue to exit the market because of the volatility.
Excess & Surplus Line Growth: The AI X Factor
Increased demand for specialized coverage or the market exodus of standard carriers are not the sole factors behind the E&S sector’s growth. Over the past two years, advancements in InsurTech and Artificial Intelligence (AI) have demonstrated the rapid pace of technological evolution. The evolution of technology has reshaped how business is conducted, particularly in the wholesale insurance sector. While digital-first companies may raise concerns about inefficiencies in the value chain, these challenges have not significantly hindered intermediaries. E&S insurance leaders are doubling down on digital transformation, which is facilitating the skillful navigation of the sector’s cyclical and structural challenges. Here’s how Nationwide and PHYL are leveraging AI to capitalize emerging opportunities and outpace the competition.
Agile Engagement & Speed to Market
Digital transformation is revolutionizing how wholesalers engage with and service their retail agent partners. New technological innovations are strengthening relationships with retail partners while improving operational efficiency. Embracing a service-oriented mindset is one of the ways PHYL sets itself apart from the competition.
“We’re a very service-orientated company. We do our best to turn things around quickly, pick up the phone, answer our agents who need us,” said Decker.
Self-service portals for retail agents, automated submission status updates, and AI-powered technical support tools are enabling wholesalers to provide 24/7 assistance while improving response times and service quality.
Technological shifts are disrupting how wholesalers connect risks with appropriate markets, too, as market access and speed to market become essential for competition. Advanced, automated market search capabilities and real-time appetite tracking enable more efficient and accurate placements, while digital platforms streamline the entire submission and quoting process. These capabilities are particularly valuable to specialty and E&S line markets where market identification and access are crucial.
“Recently, we’ve seen the emergence of cybersecurity, AI, things such as cannabis, and some products around heavier manufacturing in a new and innovative product manufacturing space. We have the ability to adapt our appetite to take advantage of these opportunities as they’re emerging before they may have the industry data around them that standard companies need to feel comfortable writing that business,” said Anthony.
Deeper Data Insights & Relationships
Access to deeper data insights is allowing wholesalers to deliver more value in an industry that remains largely relationship driven. Advanced analytics capabilities provide wholesalers with unprecedented insights into market trends, placement success factors, and relationship dynamics.
“The industry is making tremendous strides in the use of data, analytics, technology, and you’re seeing it especially when it comes to modeling,” said Decker.
Forward-thinking wholesalers are supplementing traditional insurance data with different types of third-party data to unlock deeper insights and identify markets for new products and anticipate claims experiences. Leveraging new AI-powered policy data extraction tools and data lakes, for example, is allowing wholesalers to transform unstructured data into a competitive advantage.
“At Nationwide, we believe that our data-advanced analytics and modeling journey is that of collaboration and insight. We’re looking to bolster our already superior industry relationships,” concurred Anthony.
Sharpened Underwriting & Risk Assessment
Complex and unique risks require specialized expertise. AI cannot fully substitute surplus line underwriters – deep knowledge of these exposures is still critical for risk assessment. However, AI advancements are helping insurers sharpen their risk assessments and develop more precise policy solutions. Advanced AI capabilities and systems that capture carrier appetites along with broker feedback on strengths and weaknesses can accelerate the process of finding suitable insurance solutions, ultimately improving efficiency and service delivery. These technological capabilities are particularly crucial for wholesalers handling specialized or hard-to-place risks, where market identification and risk assessment accuracy are critical success factors.
Enhanced Operational Capacity
Wholesale leaders are recognizing that what was considered effective in a core process like claims processing can quickly become antiquated as new solutions enter the market. Modern claims processing systems are transforming how wholesalers manage and facilitate claims interactions between retail agents and carriers. Digital collaboration platforms are streamlining communication and documentation flows, while real-time analytics provide unprecedented visibility into claims status and trends. This technological evolution is enabling wholesalers to add significant value to the claims process while reducing friction and accelerating resolution times.
In the back office, automation technologies are transforming how wholesalers manage internal operations and compliance requirements. Modern systems are streamlining policy issuance, premium accounting, and document management while ensuring regulatory compliance. This automation enables wholesalers to manage larger volumes of business more efficiently while reducing errors and improving accuracy.
How Excess & Surplus Lines Can Sustain Success
Success in the evolving insurance landscape hinges on the ability to integrate innovation with specialized expertise while maintaining strong relationships with both retail agents and carriers. Looking ahead, the E&S market is expected to continue its upward trajectory as it continues to provide solutions that have eluded standard lines carriers. As demand for customized insurance products grows, AI adoption will likely drive ongoing progress, reinforcing the market’s strength and sustainability. Recognizing the opportunities of integrating AI can help intermediaries continue to redefine their roles in an increasingly automated landscape and sustain record-level growth.
Maintain Growth Momentum
Get more tips in Patra’s 2025 AI and InsurTech Trends & Impact Analysis Report.
