Shifts in the E&S Marketplace Underway

—Reprinted from PIA Magazine, May 2025, with permission from PIA Management Services Inc.—

Shifts in the E&S marketplace underway: Areas are stabilizing, but there are chances for progress

Kristen Skender, director of Corporate Development and SVP of Brokerage, Jimcor Agencies

Across the nation, the excess and surplus lines marketplace continues to grow in policy count and premium. Representing a variety of placement options in the nonadmitted marketplace, wholesale brokers and managing general agents are experiencing growth as certain risks cannot be placed in the admitted market. In the 2024 report on the market segment published by AM Best, surplus lines stamping offices reported growth of 17.4%, and a record breaking $115.6 billion in surplus lines direct written premium.¹

While most product and market sectors continue to feel the effects of the hard market, some sectors’ rates have stabilized, which has reduced the average annual percentage increases in commercial lines. Stabilizing markets include: workers’ compensation and directors & officers.

Conversely, in the commercial casualty, property and specialty market sectors, producers continue to evaluate each risk closely. For example, in the casualty sector, producers are monitoring trends in:

• social inflation,
• Nuclear Verdicts,® and
• emerging risks, including forever chemicals.
  

Trends in the property markets on the East Coast, include new entrants, reduced rates and increased capacity varying on the construction type, occupancy and location. Some categories of risk continue to feel the effects of the hard market, and (so far) 2025 has presented unpredictable shifts on a risk-specific basis.

These trends are influenced by recent weather events, including earthquakes, hurricanes, wildfires and floods. Each risk is modeled by its unique schedule of locations and current trends. We find the forecasts to be unpredictable, and current events can be catastrophic at times. However, the advantages of technology are starting to provide capacity by identifying areas in which additional capacity can be deployed, better utilized or an alternate risk-transfer method offered, such as parametric insurance products.

The need for information

These factors lead those individuals in the insurance industry to need better underwriting information, real-time data and transparent dialogues with their clients on market expectations and product options.

Having higher quality submission information empowers your wholesaler to advocate for the best rates, forms and options available in the shifting marketplace. 

We are seeing that E&S carriers are requiring wholesalers to have more data points and to utilize all underwriting tools available to us to assess a risk. Their expectation of our knowledge of each risk has increased dramatically over the last few years.

New entrants in the marketplace

The pace of new carriers, product roll outs and technology are faster than ever. Partnering with a wholesaler that prioritizes providing access to limited distribution programs, new entrant carriers and unique solutions gives an edge to retail agents.

We are seeing new entrants with InsurTech or outside industry funding that seek to place policies direct to insureds or through strategic distribution partnerships of large retailers and wholesale/brokerages to capture the small- to mid-sized retailer opportunities.

Industry classes

We are observing several shifts in opportunities, in which the current marketplaces are increasing rates or nonrenewing. This offers a chance to support these businesses with new solutions and placement options. Some of these opportunities can be found in the following sectors:

Data centers for AI, crypto and other emerging tech. Opportunities are emerging as data centers pop up across the country, and expand their operations to support artificial intelligence, large amounts of data, crypto and other storage needs.

Cannabis–from seed to sale. Emerging risk categories include: growers and dispensaries in states with new legislation, delivery and transportation of cannabis products, the potential of on-site consumption/tasting, and a variety of infused beverages and food products.

Construction, including hard-to-place trades (e.g., roofers, exterior, demolition). Projects that were paused or delayed are beginning to restart this spring. Check in with your clients who had a potential project or expansion that was delayed. Now may be the time they are ready to start!

Contractors who experienced increased pricing over the last several years, continue to shop their insurance annually to explore options and increase profitability, as the cost of construction materials remains high. Committed restaurants, retail establishments and landlords are investing to make their properties the most attractive and desirable. Property vacancies and business closures also stand out as opportunities.

Churches, religious institutions or houses of worship. Several markets have exited or have shifted their appetite to be more restrictive on churches, religious intuitions or other houses of worship. We are seeing many nonrenewals, which presents an opportunity for retailers that want to get into this marketspace.

Temporary staffing companies. Pricing increases, nonrenewals and market exits impact the temporary staffing marketplace, including workers’ compensation, package and professional. There are limited markets in this industry sector—making specialized programs and wholesalers more sought after.

Security companies. Security is being required at a variety of events and venues. This increasing need for security has driven demand for insurance solutions for security guards—both armed and unarmed. There is limited market appetite with specialization for placement, driving many of these risks to the E&S wholesale sector for consultants, contractors and related insureds.

Lessors risk with high-risk tenants. High-risk tenants, including cannabis, medical, day care, gambling or other exposures, are increasing. We are seeing frequent properties under renovation, as well as a unique mix of occupancies/tenants with a variety of retail, residential and commercial tenants in common spaces. These are creating new placement challenges for property owners that the wholesale marketplace can help solve.

Vacant properties–commercial & residential, including under renovations, additions, etc. Higher construction and materials costs are leading to increased renovations costs. Many carriers have a limitation on length of vacancy, cost of improvements or renovations and partial occupancies while under construction. These are leading many vacant property owners to the E&S marketplace for solutions.

Gas stations and convenience stores. Gas stations with other amenities, including liquor sales, gambling, 24-hour operations, car washes or repair services are increasing. These, along with standard gas station and convenience stores, are being nonrenewed in certain regions, which presents opportunities for package, environmental/tanks and liquor to the E&S marketplace.

Day cares–in-home or standalone. The market availability and options for day cares shifted in 2024, and this shift continues in 2025. Seeking solutions as summer approaches makes this a hot market for the E&S marketplace to offer solutions for both in-home, standalone or specialized educational and entertainment/extracurricular programs.

Products–manufacturers or wholesalers. A variety of manufacturing, production, relabeling, importers and redistributors present opportunities in the products marketplace. There has been a resurgence in exploring local manufacturing, warehousing and distribution options as companies prepare for potential tariffs or restrictions that may impact the supply chain.

Personal lines–Northeast coastal homes & high-valued homes. Due to the location, property value, rental/partial tenant occupied or vacancies many coastal homes, high-valued homes and personal-lines clients seek solutions for their insurance. With renewal costs continuing to trend upward in most regions, many accounts are being marketed to review options and assure they have the best coverage and pricing available.

Coverages increasing in demand

Employment practices liability insurance. Most businesses have experienced a potential or alleged EPLI claim, but few of them have the correct coverage with a broad form, in lieu of a business owner’s policy add-on or enhancement. This can make the difference in covered claims, limits and policy exclusions. Typically, standalone polices for EPLI provide broader coverage and higher limit options.

Cyber/data breach insurance. The impact of a cyber or data event including breach, ransomware, cyberattack (e.g., phishing, smishing, vishing) can halt a business immediately. Few companies can operate without their hardware, software or networks. A variety of options are available. Offering this coverage option to your clients protects your agency if a client experiences a cyber or data event—especially if an insured opts out of the coverage, and that declination is documented.

Active assailant insurance. The policies—formerly known as active shooter insurance—are being broadened to active assailant, which provides a broader description of the type of weapon, intent and impact. While we hope none of our clients need this type of coverage, unfortunately some businesses—places with student populations, religious buildings or gatherings of large groups of people—provide a platform for the increased potential for such incidents.

Parametric and alternative solutions. Policies that are measurable—weather or other incident—can respond immediately if a coverage trigger occurs. In many cases, parametric insurance policies will respond faster than the traditional marketplace in payment of a potential claim. These are becoming more appealing to buyers, and they are available through the wholesale marketplace.

We are seeing increased interest to explore alternate solutions and parametric products for risks. Retail agents, lenders and other stakeholders need to educate themselves on the options available in these emerging policies.

Final thoughts

The partnership between the retail agent and the wholesaler continues to be important—especially as many insurance sectors continue to feel the effects of the hard market. By working together agents and wholesalers can find the best insurance options, such as new specialties or emerging markets—for their insureds.

Skender spent three years on the retail agency side of the business, and the last 20 years in strategic leadership in the E&S wholesale market sector. She is the senior vice president, brokerage and director of corporate development for Jimcor Agencies, headquartered in Montvale, N.J. Jimcor Agencies helps navigate the E&S, specialty admitted and parametric market sectors with emerging options. For more information on the coverages mentioned in this article or other coverages, contact marketing@jimcor.com or visit www.jimcor.com.

¹ AM Best, 2024 Market Segment Report (news.ambest.com/research)