| Insurance Franchise | Last updated on: Sep 7th, 2026
Direct answer: Access to excess and surplus lines markets decides which accounts an independent agent can compete for, not only which difficult risks they can solve. Surplus lines carriers wrote 25.7% of US commercial property and casualty premium in 2024, up from 7.1% in 2000, according to AM Best, and a retail agent reaches that market only through a wholesale broker or managing general agent holding surplus lines authority. An agent without that route refers the risk out, and the standard policies attached to the same client usually leave with it. The independent agency channel used surplus lines at a 9.9% utilization rate in 2025, above its 9.3% five-year average, per the Big “I” 2026 Market Share Report.
Key takeaways
- Surplus lines carriers wrote 25.7% of US commercial property and casualty premium in 2024, up from 7.1% in 2000. Their share of all P&C premium rose from 3.6% to 12.3% over the same period.
- Total surplus lines direct premium reached $129.8 billion in 2024, a 12.3% increase and the seventh consecutive year of double-digit growth, according to AM Best.
- Premium growth has since moderated while transaction volume has not. Stamping office premium rose 2.8% in the first half of 2026 while item filings rose 16.9%, which means more risks kept moving to the E&S market as rates softened.
- The independent agency channel reached a 9.9% surplus lines utilization rate in 2025 against a 9.3% five-year average, and a 52.6% private flood utilization rate against a 47.4% average.
- Non-admitted does not mean unrated. At midyear 2025, 98% of surplus lines insurers held AM Best issuer credit ratings of “a-” or higher, against 85% for the whole P&C industry.
- Six states have now eliminated diligent effort search requirements entirely, so the compliance path is getting shorter rather than longer.
- The hard risk is the entry point, not the prize. An agent who can quote it earns first look at everything else that client buys.
What are excess and surplus lines?
Excess and surplus lines, usually shortened to E&S, is insurance written by carriers that hold no license in the state where the risk sits. Those carriers are called non-admitted or surplus lines insurers. They operate legally under each state’s surplus lines statutes, and they exist to cover risks licensed carriers decline.
The trade-off is regulatory. An admitted carrier files its rates and policy forms with the state for approval, which protects the buyer and constrains the underwriter. A surplus lines carrier does not file for that approval, so it can price a risk as it sees fit and write terms, exclusions, and limits built for one specific account. AM Best describes that freedom of rate and form as the market’s central function, and credits it for the creative coverage solutions the standard market cannot produce.
A retail agent cannot approach these carriers directly. Access runs through a wholesale broker or a managing general agent holding surplus lines authority and carrier relationships. That intermediary is the reason the market stays closed to some agents and open to others.
Why do standard carriers decline risks that other carriers will write?
Standard carriers decline risks that fall outside a filed appetite, not risks that are uninsurable. An admitted carrier writes to an approved rate and form, so a submission that does not fit has nowhere to go inside that carrier, however good the account looks.
Five patterns account for most declinations.
Catastrophe exposure. Coastal wind, wildfire zones, and flood-prone property.
Loss history. Prior claims price the account out of a filed rate.
Class of business. Contractors, trucking, bars and restaurants, habitational property, and staffing firms move to E&S routinely.
Coverage the admitted form handles badly. Cyber is the clearest case, and surplus lines carriers wrote 60.6% of all US cyber direct premium in 2024.
Limits. The risk needs capacity above what the primary carrier will offer.
None of those make an account unattractive. They make it unwritable by that carrier, on that form, at that moment. Appetite also shifts constantly, which is why a class that placed easily two years ago can suddenly need a wholesale submission. AM Best attributes much of the recent flow into the E&S market to admitted carriers narrowing risk appetite to protect underwriting results.
How much business now sits outside the standard market?
Roughly a quarter of US commercial premium does, and the share has more than tripled since 2000. Surplus lines crossed the 25% threshold of commercial lines premium for the first time in 2024.
| Measure | Figure | Period |
|---|---|---|
| Surplus lines share of US commercial lines DPW | 25.7%, up from 7.1% in 2000 | 2024 |
| Surplus lines share of total US P&C DPW | 12.3%, up from 3.6% in 2000 | 2024 |
| Total surplus lines direct premium written | $129.8 billion, up 12.3% | 20204 |
| Stamping office premium, full year | $90.3 billion, up 7.8% | 2025 |
| Stamping office item counts, full year | Up 14.1% | 2025 |
| Stamping office premium, first half | $47.6 billion, up 2.8% | H1 2026 |
| Stamping office item filings, first half | Up 16.9% | H1 2026 |
| Independent agency channel surplus lines utilization | 9.9%, against a 9.3% five-year average | 2025 |
Sources: AM Best, WSIA, and the Big “I” 2026 Market Share Report.
Premium growth and transaction volume have split apart, and that gap matters more to an agent than either figure on its own. Premium rose 2.8% in the first half of 2026 while item filings rose 16.9%, so pricing softened across a rising count of placed risks. The flow of accounts into the E&S market keeps increasing even where the premium on each one falls. Only 15 states operate a stamping office, and those states handle roughly 64% of national surplus lines premium, so these figures show the market’s direction rather than its full size.
What is the difference between admitted and non-admitted insurance?
Admitted carriers hold a state license and file rates and forms for approval, while non-admitted carriers do neither and write to their own terms under the state’s surplus lines rules. The practical differences change how an agent sells the policy.
| Feature | Admitted carrier | Non-admitted carrier |
|---|---|---|
| State licensing | Licensed where the risk sits | Not licensed there, operates under surplus lines statutes |
| Rate and form approval | Filed with the regulator for approval | Written without prior approval |
| Coverage flexibility | Limited to the approved form | Terms, limits, and exclusions built for the individual risk |
| State guaranty fund | Policyholders generally protected if the carrier fails | Policyholders generally not protected |
| Route to market | Direct carrier appointment | Wholesale broker or MGA with surplus lines authority |
| Financial strength oversight | Regulated capital requirements plus rating agency review | Rating agency review, with 98% rated “a-” or higher at midyear 2025 |
| Premium tax | Handled by the carrier | Filed and remitted by the surplus lines broker, cost usually passed to the insured |
Source: AM Best, for the rating distribution.
The guaranty fund row is the one clients ask about, and the rating row answers it. Non-admitted status describes a carrier’s regulatory relationship with a state, not its balance sheet. AM Best found 98% of surplus lines insurers rated “a-” or higher at midyear 2025 against 85% across the P&C industry, so the average E&S carrier carries a stronger rating than the average admitted one. Licensing, form approval, and guaranty fund treatment all vary in detail by state, and a small number of states handle guaranty fund coverage differently, so confirm the rule where you write.
What does an agent lose by saying “I can’t quote that”?
The account they were asked about, and the referral relationship that produced it. The visible cost is one declined submission. The real cost is everything that would have followed it.
Consider what happens next. The prospect takes the risk to an agent who can place it. That agent now holds an underwriting file, a renewal date, and a reason to ask what else the client insures. Nothing in that exchange favours the agent who said no, and the client has just learned which of the two solves problems.
The referral channel compounds it. Accountants, lenders, real estate brokers, and existing clients send the difficult cases first, because those are the ones needing a specialist. An agent known for placing the difficult risk gets the introductions. An agent who returns the file gets fewer of them next year.
Do clients who bring a hard-to-place risk bring the rest of their business?
Often, and the reason is structural rather than statistical. A client shopping a standard policy has dozens of options and buys largely on price. A client with a risk two carriers already declined has almost none, and the agent who solves it holds a position no competitor undercuts on rate.
That position is where account rounding starts. The agent already holds the loss history, the schedules, the entity structure, and the renewal dates. Every additional line becomes an easier conversation. The Liberty Mutual 2026 Independent Agency Growth Study puts average independent agency retention at 84%, with its high-retention group at 95% or better, and relationship depth is one of the levers separating the two.
One caveat on that study. Liberty Mutual is a carrier, and its respondents came from internally managed panel lists rather than a random industry sample. The 84% figure is the best available benchmark, not a census.
Do not read any of this as a promise, because no published research tracks the specific path from a placed E&S risk to a rounded account. What the data does establish is the size of the opening. Independent agencies wrote 87.7% of US commercial lines premium in 2025 and 39.5% of personal lines, so an agent able to serve both sides of a client already works in the dominant channel for both. Our guide to personal lines vs commercial lines covers how the two differ in practice.
What does placing a hard-to-place risk actually require?
An intermediary, some documentation, and tolerance for an outcome you do not control. Any agent who has submitted to a wholesaler knows the last part. Appetite decides the result, and a submission is a request rather than a placement.
Who holds the authority to place the business?
A surplus lines broker license, held by whoever places the business with the non-admitted carrier. Most retail agents do not hold one and do not need to, because they submit through a wholesale broker or MGA that does. What the retail agent needs is a working relationship with that intermediary, since no relationship means no market access regardless of licensing.
What does a wholesale broker actually do?
It markets the risk to non-admitted carriers on the retail agent’s behalf, negotiates terms, and handles the compliance mechanics of the placement. The retail agent keeps the client relationship. The wholesaler brings carrier relationships, underwriting judgement about which market will look at the risk, and the authority to bind it. AM Best credits wholesalers with a critical and growing role in developing products and placing business in this market. Compensation is customarily shared out of the commission on the placement.
What does the state require on paperwork?
Most states still require documented diligent effort, meaning evidence that a set number of admitted carriers declined the risk first, though that requirement is receding. Six states have eliminated it outright: Louisiana, Mississippi, Virginia, Wisconsin, Florida as of July 1, 2025, and North Dakota as of August 1, 2025. Several others, including Illinois, Minnesota, Colorado, and Connecticut, have waived it for placements made through an unaffiliated surplus lines broker. Where the requirement remains, classes on a state’s export list are exempt from the search. The surplus lines broker then files the transaction and remits premium tax, and that cost normally appears on the client’s invoice. Requirements vary by state, so an intermediary’s familiarity with local filing rules is part of what an agent is buying.
How do Renegade franchisees reach specialty and surplus lines markets?
Through affiliated wholesalers, on an optional basis, with customary wholesale compensation. Most agents understand the argument above long before they can act on it. The gap is not knowledge, it is access, and access depends on relationships an agency otherwise builds one wholesaler at a time.
Commercial lines run through training and approval first. Writing commercial requires completing a training course and receiving franchisor approval, and carrier appointments also depend on each carrier’s own criteria. That sequence exists because commercial mistakes are expensive, and the training exists so the requirement is passable. Approved commercial lines include commercial auto, truck insurance, general liability, professional liability, and business owner’s policies.
Personal lines stays the foundation. Specialty access and commercial capability sit on top of the personal lines book an agent already knows how to build, and adding them requires giving up none of it.
Full detail is on the Renegade Insurance franchise page.
Frequently Asked Questions
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Is non-admitted insurance safe?
Non-admitted carriers generally fall outside state guaranty fund protection, but they are rated. AM Best found 98% of surplus lines insurers held issuer credit ratings of “a-” or higher at midyear 2025, against 85% for the P&C industry overall. Non-admitted describes a carrier’s licensing status in a given state rather than its financial strength.
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Do I need a surplus lines license to place E&S business?
Not if you submit through a wholesale broker or MGA that holds the authority. The license sits with whoever places the business with the non-admitted carrier. Requirements vary by state, so confirm the rule with your own department of insurance before relying on that.
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What is the difference between a wholesale broker and an MGA?
A wholesale broker markets a risk to multiple non-admitted carriers without authority to bind on their behalf. A managing general agent holds delegated underwriting authority from specific carriers and can quote and bind within it. Agents often use both, depending on the class of risk.
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Which classes of business most often need surplus lines?
Commercial liability and commercial property dominate, together accounting for close to 70% of stamping office premium across 2022 to 2024. Commercial auto has been the fastest-moving category, with auto liability premium up 69.9% over that same three-year period as standard carriers pulled back capacity. Habitational and coastal property, contractors, cyber, and cannabis operations also route to E&S routinely.
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Is surplus lines only a commercial market?
No, though it remains heavily commercial. Surplus lines carriers wrote 1.9% of total US homeowners premium in 2024, up from 0.8% in 2014, as catastrophe volatility pushed residential property out of the admitted market. The independent agency channel’s private flood utilization rate reached 52.6% in 2025 against a 47.4% five-year average.
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Who pays surplus lines taxes?
The surplus lines broker files the transaction and remits premium tax to the state, and the cost normally passes through to the insured on the invoice. Tax rates and filing rules differ by state.
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Is the surplus lines market still growing?
Premium growth has slowed while transaction volume has risen. AM Best recorded seven consecutive years of double-digit premium growth through 2024, then moderation during 2025. Stamping office premium rose 2.8% in the first half of 2026 while item filings rose 16.9%, indicating softer pricing across a larger number of placed risks rather than falling demand.
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Can an agent write both personal and commercial lines in a franchise?
That depends on the franchise agreement, and any specific claim about lines, training, or approvals belongs in the franchisor’s disclosure document rather than in marketing material. At Renegade, commercial lines require completing a training course and receiving franchisor approval, with carrier appointments also subject to each carrier’s criteria.
