The US excess and surplus (E&S) property insurance market is experiencing heightened competition and increased capacity, according to insights from Risk Placement Services (RPS).
The pace at which managing general agents (MGAs) are entering the market and automated capacity is being introduced has resulted in brokers having access to more capacity than required for most deals. This environment has enabled clients to restore limits and coverages lost in 2023 and use premium savings to reduce deductibles.
RPS notes that while this expanded capacity benefits buyers, there is growing concern among underwriters that rates and underwriting conditions are declining rapidly. “If the market drops 10% to 15% next year, they'll quickly be pricing business at a break-even point or at a loss, according to technical pricing,” RPS said.
Underwriters are currently running 7.5% to 10% above technical pricing, but further rate decreases could challenge profitability, especially if weather-related losses increase.
Read more: AM Best revises US E&S lines outlook
These trends are unfolding as the E&S market’s share of the US property/casualty sector has reached about 9% in 2025, nearly double its 2017 level. In the first half of the year, surplus lines premiums in reporting states rose 13.2%, with commercial liability and property lines dominating.
This development was highlighted by AM Best, which revised its outlook for the E&S segment to stable from positive, citing moderating premium growth and early signs of rate softening. The agency noted that underwriting and operating profitability remain supportive, but cautioned that rate momentum is easing in select classes, and loss cost uncertainty – including social inflation and catastrophe volatility – continues to require attention.
Capital continues to flow into the insurance market, with carriers positioned to report strong profits for the third consecutive year, due in part to a lack of significant hurricane activity affecting the Atlantic and Gulf Coast. RPS highlights that these profits follow seven years of underwriting losses leading up to 2023, creating a more favorable trading environment.
Recent discussions in London indicate that catastrophe-exposed property rates have declined by 15% to 20% in 2025, with expectations for continued, though slower, rate decreases in 2026. Most syndicates are budgeting for a 10% rate reduction next year and plan to write less business. RPS reports that many syndicates are signaling a shift toward prioritizing long-term, profitable clients and resisting further market-driven rate reductions.
For insurance buyers, the outlook for 2026 points to another year of competitive renewals. RPS expects underwriters to focus on retaining desirable business, trading rate for terms and conditions, and remaining aggressive on new business that aligns with their portfolios.
Clients are anticipated to use premium savings to enhance coverage or reduce retention levels, with the ability to replace carriers that are less flexible or commercial.
Despite the perception of a quiet claims year, the North American property market has recorded $60 billion to $70 billion in insured losses in 2025, primarily from Los Angeles wildfires and spring flood and convective events.
However, these losses have not been significant enough to alter market momentum, according to RPS. The cyclical nature of the market persists, with the threshold for a market-changing event now perceived to be above $150 billion in losses.
Read more: P&C earnings mixed in Q3
RPS also observes changes in line setting and deal structuring in 2025, as carriers write larger lines and brokers push to expand layers. While this can lead to modest rate decreases, it also raises concerns about repeating issues from 2023, when shrinking capacity led to compressed layers and higher pricing.
RPS advises buyers to consider program stability and partnership over short-term rate gains, suggesting that diversified programs with more participants may offer greater long-term resilience.
Looking ahead, RPS anticipates that 2026 will begin with carriers posting healthy profit margins, abundant capacity, and property rates down 10% to 15%. Carriers may be more aggressive early in the year, with a potential slowdown as wind season approaches.
RPS expects the pace of rate deceleration to ease but acknowledges that market conditions remain subject to change. The firm concludes that the favorable environment of 2025, which surpassed initial predictions, underscores the cyclical dynamics of the E&S property market.
