The US surplus lines market, including aggregated premiums written by Lloyd’s syndicates and non-Lloyd’s alien insurers, has achieved 10.4% year-over-year (YoY) growth, a new AM Best report reveals.
This marks an eighth consecutive year of double-digit expansion, though performance over the past three years indicates a gradual slowdown in market growth, the report notes.
Additionally, US domestic surplus lines insurers generated $105.9 billion in direct premium written of the total surplus lines market premium of $143.2 billion in 2025, representing a YoY increase of 8.9%, according to the Best’s Market Segment Report “US Surplus Lines Market: Competition Moderates Premium Growth, But Customization Solidifies the Market’s Value.”
Although this growth remains significant, it marked the end of a seven-year streak of double-digit premium expansion for domestic insurers.
The report also highlights that tailored coverage addresses the requirements of emerging, complex, and evolving commercial risks, serving as a key driver of growth for specialty lines.
This customisation is expected to mitigate any substantial shift back to the standard market resulting from pricing dynamics.
“Despite a moderation in overall growth, a composite of surplus lines tracked by AM Best did manage to increase its net underwriting profit by more than $1 billion in 2025, displaying disciplined underwriting and pricing coupled with expert risk selection,” AM Best stated.
Adding: “From an operating profit perspective, the surplus lines composite generated a 19.5% increase in pretax operating income for the year. The total surplus lines market’s 10.4% growth in 2025 once again outpaced the modest 5.1% growth for the total U.S. property/casualty (P/C) industry.”
According to the report, the surplus lines and specialty commercial market has become highly competitive in the 18-month run-up to mid-2026, with supply outweighing demand.
“An abundance of capital and heightened competition among insurers, reinsurers and managing general agents has shifted more of the negotiating power to the buyer’s or policyholder’s side,” said David Blades, associate director, AM Best.
AM Best revised its market segment outlook for the surplus lines market to stable from positive in November 2025, reflecting moderating premium growth and rate softening amid loss cost uncertainty.
The outlook also noted capacity had become increasingly more selective on terms and conditions and had raised performance thresholds at renewals.
The report also found that rapid technological growth and e-commerce expansion have made robust risk management strategies a necessity, boosting demand for specialised insurance products.
As these coverages for complex exposures are not readily available through standard market insurers, which drives demand towards the surplus line market.
Because major surplus lines carriers operate both admitted and non-admitted entities, they can readily shift exposures between platforms as conditions evolve..
When it comes to AI exposures, admitted insurers are focused on implementing the best, most absolute AI exclusions and limiting coverage in traditional general liability policies.
