- Rising corporate distress and bankruptcy risk is driving more complex financial lines submissions into the US wholesale/E&S market.
- Carriers are responding by launching or expanding dedicated wholesale underwriting units to deliver faster decisions and bespoke structures for brokers.
- Surplus lines growth is led by liability financial/professional covers, while some property-heavy segments are slowing.
- Key concerns are whether capacity, pricing discipline, and reserves can keep pace as competition increases and some lines soften.
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The recent article by Gia Snape reveals that carriers like Westfield Specialty are actively responding to broker demand for wholesale financial lines underwriting characterized by complexity and urgency. Distressed corporate activity—ranging from elevated bankruptcy filings to high variable debt burdens—is reshaping which insureds are approaching the market. This escalation in financial distress is manifesting across sectors and forcing many insurers to rethink underwriting, speed of response, and structural capacity.
Corroborating evidence from broader prop‐and‐casualty (P&C) and E&S market data shows that the surplus lines segment has been growing rapidly, particularly in liability lines. The E&S market saw nearly US$98.2 billion in direct premiums written in 2024, up by ~13-14% over 2023, with liability coverage accounting for over half of that volume. Liability segments—other liability occurrence, claims-made liability, E&O, and product liability—are seeing especially strong growth. Meanwhile, E&S property lines showed strong but slowing growth. Insurers are thus facing diverging pressures: liability lines carrying elevated reserve development and adverse claims trends, while property lines contend with catastrophe exposure and rate regulatory constraints.
Strategic responses are consistent across sources. Insurers are: 1) standing up wholesale/E&S units (e.g. Axa XL’s standalone E&S facility, Nationwide’s dedicated Brokerage Property unit); 2) expanding underwriting teams with specialists in distressed or complex financial profiles; 3) innovating with product bundling across EPLI, D&O, E&O, etc., to meet broker expectations for simplicity and integrated coverage; 4) leaning into surplus lines structures for flexibility away from rate regulation; and 5) forging durable broker-underwriter relationships. However, these efforts carry risks: softening in some property E&S lines could pressure growth; adverse reserve development in casualty liability (historical years) remains a concern; capacity might lag in the face of rising risk; competitive dynamics may stress pricing discipline.
Open questions include: How sustainable is the appetite for higher risk/complexity amid investment income uncertainty? Will regulatory restrictions on admitted markets further push risk to wholesale/E&S? Can new wholesale units maintain underwriting rigor without accumulating legacy losses or weak reserve structure? What are reinsurers’ views on capacity exposure given macroeconomic volatility? How will which lines begin to see competitive softening first—liability or property? These will shape where pricing, capital deployment, and risk transfer converge in the next 12-18 months.
Supporting Notes
- US corporate bankruptcy filings reached 694 in 2024; 655 filings through October 2025 suggest 2025 is on track for the highest since 2010.
- US bankruptcy petitions numbered 504,112 in 2024, up by more than 70,000 year-over-year.
- E&S direct premiums in the US increased ~13.4% in 2024 to US$98.18 billion; liability lines accounted for ~52.2% of that volume.
- E&S premiums via delegated underwriting authority rose ~28.5% in 2024.
- AZA XL is launching a new E&S vertical writing 100% wholesale business with ~45 underwriters initially.
- Westfield Specialty has established a standalone wholesale financial lines unit, redesigning clearance processes and enhancing internal coordination.