OVERVIEW
California Wildfires
While this report highlights the growth in E&S policies and other trends in the Property & Casualty (P&C) sector as we enter 2025, we must first address the devastating wildfires in southern California, which have significantly impacted the industry and local communities. Current estimates suggest these wildfires have caused $25 billion to $30 billion in insured losses, making this a defining event for the region and the insurance sector.
The loss of life is the most profound and tragic outcome, and our thoughts are with all those affected. If you have questions or need help regarding client coverage, please do not hesitate to contact our team.
The widespread property damage, fueled by unseasonably dry conditions and fierce Santa Ana winds, has also raised critical challenges for the insurance industry. More insights, both from a Personal and Commercial Insurance perspective, are discussed later in this report.
E&S status and sustained growth
Most market experts agree that the E&S sector will continue to comprise a larger percentage of the overall Commercial and Personal Insurance marketplace, grabbing continued market share from traditional carriers. As we look back on 2024 and ahead to 2025, a prevalent trend in the P&C sector is continued growth in non-admitted policies.
These non-admitted carriers have altered the industry, impacting how both established, traditional admitted carriers and small, boutique firms operate.
A 2024 Conning Report projects that non-admitted market growth will continue in double digits, albeit at a slower pace in the years ahead, approaching $111 billion in premiums in 2024. This would account for nearly 10 percent of the U.S. P&C industry.
Reasons for the continued, but somewhat slower growth include:
- Increasing state regulations: State regulatory commissions will likely take a closer look at non-admitted policies in the coming years—specifically in Personal lines and in states where capacity constraints and affordability issues are raising questions with elected officials.
- Inflationary pressures: Nuclear verdicts and CAT weather events have grown in recent years, placing more stress on the P&C market.
- Consumer preferences: Consumers generally prefer admitted policies, which among other benefits, allows them to appeal to states in the event of insurer insolvency.
Reasons for sustainable growth include:
- Admitted carrier actions: The growth of the E&S market is also being fueled by an increasing number of non-admitted divisions being formed by established carriers. This may reduce the number of new non-admitted carriers entering the marketplace. Many industry experts also believe that larger global insurers will continue to lean into the non-admitted sector, leveraging their significant admitted presence.
- Predictive underwriting: Traditional carriers are more willing to invest in E&S business because of increased demand, and their access to more data and analytic information which is used to help make more informed underwriting decisions. This access allows carriers to model the risks more effectively, in theory reducing the uncertainty and increasing predictability.
- Technology improvements: In addition to accurate and advanced risk modeling, the need for greater efficiency and productivity is crucial. The E&S space continues to make technological improvements to make the jobs of retail brokers and agents easier. Burns & Wilcox has developed a direct retail platform –IssueQuick–which allows brokers to quote and issue a variety of policies for their clients in minutes.
- Specialization: Traditional admitted carriers are often unable to provide affordable options for some clients operating in specialized sectors. In this way, E&S is assisting an entire industry with insurance and risk management that otherwise would not be available.
RATE
The rate picture in the Personal space has altered with the southern California wildfires. At the end of December, the belief was that rates for Personal policies would moderately rise. While each individual situation is different, higher rate increases are likely. In fact, many clients may also be faced with non-renewals, especially in higher-risk geographic regions.
Excess Liability rates are on the rise as well. As with other sectors, it often takes multiple carriers to meet limit demand. Rates are more variable in General Liability, which should still see increases, depending on the class of business. Read more about those sectors below.
CAPACITY
The expectation is that there will be a slight increase in capacity for all lines of business, although once again, Personal lines may see some constriction in higher-risk areas. As previously mentioned, large, traditional carriers are increasingly willing to establish or further support divisions in the non-admitted space. This growth will open more opportunities for brokers and agents to quote business that was not previously available.
Even in hard-to-place sectors like Habitational and Transportation (more on these later), Burns & Wilcox offers the collective experience and carrier relationships to find capacity for just about any need. That may require more layering in some areas than in past years, but solutions are usually available.
TERMS & CONDITIONS (T&C)
Exclusions continue to be added to policies in the P&C space, and challenging sectors will be faced with restrictive terms and conditions. Brokers and agents should review policies in detail with the clients, and research different options that might be more favorable. Renewal changes in terms and conditions remain possible, if not likely.
As we know, the E&S market offers freedom of rate and form, and thus the advantages of adaption to market conditions. As mentioned in our quarterly P&C report in July 2024, we do not expect established carriers to relax their Terms & Conditions in the near future; carriers still want to qualify language where needed.
Contributor: Paul G. Smith, Corporate Senior Vice President, H.W. Kaufman Group, New York, NY
2025 Forecast by Line of Business
In the following, our experts delve deeper into specific sectors within P&C, explore trends and share outlooks for the year.
Personal Insurance:
Given the billions of dollars in catastrophic storm damage over the past year, we anticipate continued price increases in the Canadian Personal Insurance Property market throughout 2025. As expected, we have already begun to see non-renewals due to the unprecedented losses from these catastrophic weather events. Additionally, some markets are withdrawing from the Personal Insurance sector due to concerns about profitability and rising reinsurance costs.
The High-Value Homeowners market remains particularly challenging, with many clients facing significant renewal increases as carriers adjust their rates to better reflect the high limits of single-risk exposure. Some insured individuals may need to seek new coverage because inflation has raised their insurable limits above the maximum thresholds set by some carriers.
To better prepare insureds for potential rate or coverage changes, it is crucial to address renewals early and provide guidance on how homeowners can mitigate certain risk exposures. Homeowners who effectively manage their heightened risk exposures will have a better chance of securing comprehensive insurance solutions. For example, installing water leak detection devices, whether before or after experiencing a water claim, may help meet insurer eligibility criteria or result in potential premium discounts.
Burns & Wilcox is well-equipped to meet the growing demand for Hard-to-Place Homeowners Insurance. In 2025, we will launch new Canadian specialty homeowners and dwelling solutions. These programs will cater to mid-range and high-value homes, accommodating properties with prior losses, catastrophic risk exposure, seasonal use, rental activities, vacant or renovation risks, in-home businesses, and more.
Contributor: Michelle Allemang, Manager, British Columbia, National Product Leader, Personal Insurance, Burns & Wilcox, Vancouver, BC
Commercial Insurance:
As we enter 2025, the Canadian P&C insurance marketplace remains challenging. While there is some optimism for stabilization, shifts in the competitive landscape are affecting capacity and underwriting approaches. The low premium rates we have seen are not likely sustainable in the long term.
The market’s rapid softening in 2024 could continue into 2025, especially if rates do not begin to stabilize. In this environment, Burns & Wilcox is here to support brokers with expertise and specialized products. We have a strong appetite for challenging General Liability (GL) risks, particularly with Contractors, U.S. product exposure, and Hospitality. Properties with vacancies, mixed occupancies, and hospitality exposures are specialties of Burns & Wilcox.
Our programs are designed to help brokers secure competitive coverage. Specialized solutions include those listed above plus Small Low-hazard Contractors, Welding Contractors, Real Estate firms and more. We recognize the pressure brokers face to deliver fast solutions and are committed to providing same-day or next-day quotes for most risks we assess.
Construction
With further reductions in interest rates, there has been an increase in the number of new construction and renovation projects across commercial and residential properties, and we expect this trend to continue in 2025.
With over a decade of experience in the Construction Insurance space and well-established market relationships, Burns & Wilcox delivers highly competitive product offerings paired with superior service.
Contributors: Patricia Sheridan, Associate Managing Director, Burns & Wilcox, Toronto, ON; Steven Hrab, Director, Construction, Burns & Wilcox, Toronto, ON
Professional Liability:
The Professional Insurance market continues to adapt to the increasing challenges of 2025. Cyber threats remain a pressing concern, yet many insureds still lack adequate coverage. This gap underscores the importance of offering flexible Cyber Insurance options—whether standalone or as an add-on—to safeguard against the financial and operational fallout of cyber breaches.
Additionally, the demand for tailored coverage in the Architects & Engineers (A&E) and Miscellaneous Errors & Omissions (E&O) sectors is growing. To meet these needs, Burns & Wilcox has partnered with new markets this year, enhancing our ability to deliver innovative and competitive solutions that address the unique exposures facing these professional industries.
At Burns & Wilcox, we remain focused on empowering brokers to educate their clients and navigate complex risk exposures. By combining our market expertise with a commitment to exceptional service, we aim to provide the resources you need to build trust and deliver tailored solutions.
Contributor: Danion Beckford, Senior Underwriter, Professional Liability, Burns & Wilcox, Toronto, ON
Environmental Insurance:
The Canadian Environmental market ended 2024 in a soft position, in addition to some observed capacity hardening in specific areas, leading to a challenging overall trading climate. This situation was exacerbated by the typical rush in the latter half of the Canadian business cycle to capture new market share, often at relatively unsustainable pricing in some cases. Additionally, there was a notable volume of mergers and acquisitions, self-insurance, and business lapses, contributing to the results for 2024. As of early 2025, it is still uncertain whether these trends will continue.
Given this context, Canadian brokers are advised to seek out Environmental underwriting partners who focus on long-term stability, balancing sound underwriting practices with cautious rating strategies in 2025. Strategic brokers are expected to seek like-minded underwriters, with the collective aim of achieving stability and prioritizing high retention during these turbulent times, as this approach is sustainable in soft markets and ultimately benefits the client.
In the Commercial Insurance sector, particularly in lower-margin and more technical specialties like Environmental Impairment Liability (EIL), strong relationships are crucial, especially during soft markets. Continued success in securing new business will depend on providing robust coverage, competitive pricing, and maintaining strong, collaborative, long-term relationships between underwriters and brokers. This focus on relationships ultimately benefits the client.
Contributors: Karim Jaroudi, Manager, Environmental, Burns & Wilcox, Toronto, ON
Transportation Insurance:
The trucking and logistics market is expected to continue its cautious recovery in 2025. Rates in 2025 are likely to remain stable or increase slightly; however, higher-risk sectors, such as those involving cross-border transport, may see modest rate increases. While less volatile sectors might experience more predictable pricing, challenges such as driver shortages, supply chain disruptions, and rising claims costs related to accidents and cargo theft continue to put pressure on the market.
Given the potential for tighter capacity in certain trucking sectors, brokers should recommend diversifying coverage options. This could involve combining primary and excess policies for comprehensive protection, particularly for high-value cargo or operations deemed high-risk. Brokers also need to provide detailed client information, including fleet safety records, driver histories, and loss records. The more comprehensive the information provided, the better the chances of securing competitive coverage. Additionally, businesses that adopt risk management strategies, such as implementing advanced tracking technology and safety protocols, will find it easier to obtain favorable coverage.
Burns & Wilcox offers exclusive insurance products not available from other managing general agents, addressing unique risks that standard policies may overlook. Our comprehensive coverage options include higher limits for Motor Truck Cargo, Automobile Physical Damage, Load Broker Liability, and Freight Forwarders Errors & Omissions. We are also the Canadian distributor for Loadsure, where single-load coverage can be purchased online and on-demand.
With deep industry expertise and a commitment to exceptional customer service, the Transportation experts at Burns & Wilcox provide tailored solutions and prompt, personalized support to address the unique challenges faced by trucking companies of all sizes, from single-unit operators to large fleets.
Contributor: Fernando Batista, Manager, Transportation, Burns & Wilcox, Toronto, ON
LONDON MARKET UPDATE
Last year proved to be another profitable period for (re)insurers, with companies continuing to uphold robust balance sheets despite the challenges posed by several major hurricanes making landfall. The strategic structural changes implemented in reinsurance programs during the hard market have provided a solid foundation, fostering further confidence in the industry. These adjustments have helped mitigate risk and set the stage for continued stability and profitability.
As we look to 2025, the January reinsurance renewals have signaled a notable shift towards a softening pricing environment for portfolios that have remained largely unaffected by these catastrophic events. Early indications suggest a 10% to 15% reduction in catastrophe pricing, with placements being oversubscribed. For accounts impacted by losses, renewals have generally remained flat or have seen modest increases, reflecting the nuanced dynamics of the market.
Furthermore, they have successfully defended their retention levels, aiming to safeguard against additional catastrophe losses and exhibit greater pricing flexibility than anticipated. As a result, insurers’ balance sheets remain resilient, earnings are being reinvested, and additional capital is gradually flowing back into the market.
Casualty treaty programs have remained largely stable despite ongoing concerns regarding pricing adequacy that have pervaded discussions over recent years. However, new programs or products that lack loss experience or those potentially exposed to the risk of nuclear verdicts continue to attract heightened scrutiny. This caution indicates the evolving risk landscape and the industry’s commitment to prudently managing its exposure.
Carriers are now facing the delicate balance of pursuing growth while preserving underlying profitability. The recent wildfires in California are a reminder that significant events occur outside of the wind season. The impact of the reinsurance renewals and softening of rates is filtering down to direct and facultative placements; rates are trending downward, deductibles remain stable, and general levels of price adequacy remain strong. This combination of factors has fueled an atmosphere of optimism within the market, even amid ongoing geopolitical uncertainties.
In the London/Lloyd’s market, there continues to be investment in digital trading, analytics, and more efficient methods of providing follow market capacity. This is partially driven by an expectation that rates and profit margins will come under increasing pressure as market pricing gradually recedes from the recent highs.
The industry’s capacity for adaptability and resilience continues to underpin its long-term outlook, ensuring that it remains well-positioned to navigate the complexities of the global risk environment.
Contributors: Paul Greensmith, CEO, H.W. Kaufman Group London; James Stevenson, Executive Chairman, H.W. Kaufman Group London
CONCLUSION
The growth of E&S will remain robust in 2025; however, it is tamped slightly from its aforementioned circa 20 percent growth of recent years. We do not anticipate a shift from non-admitted back to admitted as insurers and insureds are generally becoming more comfortable with E&S placements. E&S will continue to have an advantage in providing bespoke terms, conditions, and rating mechanisms for specialized lines such as healthcare, transportation, and other professional service sectors.
There is widespread belief that the P&C sector will eventually soften, lending more importance to such trends as enhanced specialization, innovation, advanced technology, and integrated ownership structures, according to Conning.
Specialized sectors generally come with higher risk. For example, healthcare entities are under the constant threat of significant lawsuits, some of which may have resulted in serious injury or death. The same can be said for the transportation sector, where significant vehicle and truck accidents have attracted plaintiff bar action and runaway jury verdicts. These and other specialized sectors will continue to need the benefits provided by non-admitted markets even as E&S is further normalized within the industry.
Of course, what no one can predict is the quantity of severity of extreme CAT events. Greater access to technology and data, and more attention to risk mitigation can help both carriers and clients. Having a partner like Burns & Wilcox to lean on during such challenging times is the best approach to addressing such market challenges.
Contributor: Paul G. Smith, Corporate Senior Vice President, H.W. Kaufman Group, New York, NY
Disclaimer: The above information has been prepared solely for the purpose of sharing general information regarding insurance and business practice management issues. These are just our opinions and are not intended to constitute legal advice or a determination on issues of coverage.
