E&S Property Market Shifts Buying Power To Insureds In 2026

Abundant capital and intensifying competition among insurers, reinsurers and managing general agents are shifting negotiating power to buyers across the U.S. excess and surplus lines (E&S) property market, even as catastrophe losses mount and underwriting outcomes hinge increasingly on geography and individual risk quality rather than broad asset class, according to Risk Placement Services’ 2026 U.S. Property Market Outlook Report.

The E&S market, which generated roughly $100 billion in premiums in 2024 — nearly 9% of the broader U.S. property and casualty market — now finds surplus capacity outpacing demand in several segments, pressuring insurer margins even as it delivers rate relief to policyholders.

Capacity Outpaces Demand, Pressuring Margins

Insurers, reinsurers and MGAs continue deploying capital into the E&S market, RPS said, and that surplus capacity, combined with relatively benign loss activity in the fourth quarter of 2025, has created a supply-demand imbalance, RPS said. Competitive rate reductions have in many cases extended beyond levels traditionally tied to target profitability, the report said, raising questions about how carriers will sustain margins and market share.

Still, the E&S market posted a combined ratio of approximately 88% in 2024, outperforming the broader P&C market, according to the report.

Capacity growth is outpacing exposure growth in certain segments, such as construction, contributing to more frequently oversubscribed property programs, RPS found. As underwriting approaches diverge, capacity quality and claims-paying credibility are becoming differentiators for sustainable placements, the report said.

Property rate relief has been most pronounced for larger accounts and well-performing risks within layered programs, though complex risks and smaller accounts are also seeing competitive improvement, according to the report.

Wes Robinson, president of National Property at RPS, said standard property markets may still accept deals but often respond by tightening terms, such as higher deductibles, sublimits or restrictions on perils like wildfire, convective wind or flood.

Sector Outcomes Diverge By Exposure

Catastrophe volatility drove cumulative insured losses of up to $129 billion globally in 2025, with insured CAT losses reaching $20 billion globally in the first quarter of 2026 alone, RPS reported, citing Gallagher Re data. The frequency of smaller, secondary-peril events can cause as much financial damage as the severity of individual events, according to the report.

Construction has moved sharply into buyer-favorable territory, driven by excess capacity and a slowdown in U.S. construction starts, with pricing in some segments dropping below levels carriers previously considered sustainable, the report found. Manufacturing remains one of the most competitive E&S segments, particularly for food producers, recyclers, woodworkers and non-sprinklered risks, with multi-carrier structures now standard, according to RPS.

Hospitality and commercial real estate clients are regaining leverage after years of pressure, with James Rozzi, executive vice president of Property at RPS, saying clients “have real buying power again” and are able to buy back limits, reduce deductibles and recalibrate premiums simultaneously.

Public entities and scholastic institutions continue to face rate pressure tied to wildfire exposure, pushing some commercial property buyers into the E&S market, the report said. Data centers and wildfire-exposed property remain the market’s two outliers, with capacity staying selective due to high insured values, aggregation concerns and limited mitigation options, according to RPS.

Momentum Faces Untested Capacity

Newly deployed MGA-backed capacity remains relatively untested and may prove less resilient as claims activity increases, particularly where aggressive pricing and rapid expansion have outpaced underwriting performance, the report said. If loss trends accelerate or a concentrated catastrophe year emerges, current pricing may not be economically sustainable for all participants, RPS found.

Market conditions are expected to remain broadly favorable for buyers through 2026, though fire and catastrophe-driven events will need close monitoring, according to the report. RPS said a meaningful shift in market direction would likely require multiple significant loss events or a sizable unmodeled loss, and that any stabilization of rates in 2027 will depend on whether pricing remains above technical thresholds that support underwriting discipline.

Obtain the full report here. &