The US domestic E&S market maintained strong momentum in 2024, although its pace of expansion has slowed for the second consecutive year, according to data by S&P Global Market Intelligence.
Premiums have now recorded double-digit annual growth for six consecutive years. However, after years of rapid acceleration, this growth raises the critical question: Is the surge in E&S a cyclical reaction or a permanent shift?
For Matthew Dolan (pictured), president of North America specialty and executive vice president of global risk solutions at Liberty Mutual Insurance, the market has evolved beyond cyclical forces and is now anchored in structural necessity.
Dolan’s view is that while both forces are at play, the balance has tilted. “Yes, there are always cyclical catalysts that push business from admitted to E&S,” he said. “But now we’re seeing more permanence.
“Infrastructure has been built, wholesalers have expanded their influence, and carriers are setting up specialized capabilities specifically for E&S.”
He argued that there’s a growing recognition that E&S is an appropriate mechanism for today’s risk environment: one that’s faster, more complex, and unlikely to revert to something predictable or benign. In his assessment, cyclical forces still matter, but the market today is “much more predominantly structural than cyclical.”
Dolan pointed to the heightened complexity and fluidity of today’s risk environment as the primary driver of E&S growth. Climate change, weakened infrastructure, and increasingly severe natural catastrophes have reshaped the property market.
“The combination of hotter, wetter, faster, stronger storms with challenged infrastructure creates a very dynamic risk equation,” Dolan told Insurance Business. “The ability to respond quickly is incredibly important, and the E&S market is designed to facilitate exactly that.”
Casualty markets face similar pressures. Social inflation, legal system abuse, macroeconomic volatility, and shifting political and socio-economic conditions are creating uncertainty that admitted carriers struggle to address.
“When admitted mechanisms can’t respond quickly enough, business migrates to E&S where flexibility in terms, limits, and pricing is possible,” said Dolan.
Specialty lines, including environmental, healthcare, financial, and cyber, are also contributing to the expansion. Cyber in particular exemplifies the need for adaptability as exposures evolve rapidly.
Another factor is the rise of wholesale distribution. Wholesalers have grown in scale and sophistication, becoming central to connecting risks with solutions. Their influence, Dolan said, has reinforced the self-perpetuating growth of the E&S market: as more business flows in, more carriers and managing general agents (MGAs) invest in aligned capabilities, attracting even more activity.
However, not all lines are growing equally: property remains the most visibly cyclical segment. While E&S property has proven its structural relevance, pricing is heavily influenced by competitive swings. Wind-exposed catastrophe pricing, for example, has fallen sharply.
“Some would argue that it’s disproportionately low and may not be sustainable if we see a major cat event,” Dolan said.
Cyber shows similar traits. Though it has matured, Dolan argues that pricing is now lagging the true level of risk. “There’s significant latent risk, and it may take an event—or a series of losses—for pricing to recalibrate,” he said.
Looking forward, Dolan sees continued opportunity in cyber, property, and casualty. Cyber remains under-penetrated, with many buyers yet to fully recognize their exposure or adjust limits.
Property, though cyclical, will likely shift more business into E&S following catastrophe events. Casualty, meanwhile, continues to pose challenges across admitted and E&S markets alike, leaving room for sustained growth.
The strengths of the E&S model – speed and flexibility – are also not guaranteed in the long term. Dolan sees two potential inhibitors. First, regulatory oversight. “As more business moves into E&S, there’s always the possibility of increased regulation,” he said. “We haven’t seen meaningful examples yet, but it’s something we monitor because it could slow down E&S’s ability to respond quickly.”
Second, oversupply of capital. Growth has attracted investment and new entrants, and excessive capacity could drive pricing below sustainable levels. “That could distort the market and cause performance issues,” Dolan said.
Despite risks, Dolan sees positive trends in collaboration between carriers and wholesalers. Both sides now share a clearer strategic alignment: delivering responsive, bespoke solutions for clients. Data and analytics are strengthening that partnership by helping wholesalers and carriers better assess loss performance, align appetites, and improve efficiency.
Data is also central to maintaining market discipline. “Historical data is useful, but in a rapidly evolving environment, it’s not always predictive,” Dolan said. “The real differentiator is using contemporary, real-time data to anticipate changes and adjust coverage or pricing accordingly.”
While barriers to entering E&S remain relatively low, Dolan stressed that sustaining performance requires sophistication.
“It’s relatively easy to get in, but significantly more difficult to stay in and do it really well,” he said. “Effective use of data and analytics will be critical to avoiding oversupply-driven disruptions.”
For Dolan, the E&S market’s role is set to expand further. “Commitment to the E&S space is about creating real-time, sustainable risk transfer solutions,” he said.
“That’s the challenge and the beauty of E&S: it requires a contemporary understanding of how risks are evolving. We see it as a vital part of the insurance ecosystem, and we’re deeply committed to it.”
