Fortegra Chairman and CEO, Rick Kahlbaugh, appeared in the September Issue of Best’s Review to discuss growth in the surplus lines industry with AM Best’s Anthony Bellagio. The article, Surplus Lines Insurers See Continued Growth as Industry Seeks Flexibility, touched on the rising frequency of natural catastrophes, evolutions of risk, new opportunities, and more.
Read the full article here and see a summary of key points below.
Interest in the surplus lines market has grown steadily since 2018, driven by insureds seeking flexibility in the face of elevated risks and emerging technologies. Rick noted that many high-quality insurance companies are writing specialty risk on E&S paper, while David Blades, Associate Director at AM Best, observed that a number of states have reduced barriers to surplus lines access, enabling faster solutions. Growth drivers include increasing natural catastrophe severity, technological change, expanding delegated authority organizations, and emerging exposures such as artificial intelligence, data centers, and new pharmaceutical treatments.
Heightened catastrophe severity has pushed significant volumes of commercial property and homeowners' risk into the non-admitted market. The surplus lines market is now writing $4 billion in homeowners' premiums, and even as the market softens, that coverage is not returning to the admitted side.
Fortegra's strategy remains focused on disciplined underwriting, balance sheet protection, and managing volatility through appropriate catastrophe cover. While Fortegra minimizes cat exposure where possible, risks such as rain, flood, and wildfire are inherent to the business. Across the market, the quality of underwriting and the flexibility available have positioned surplus lines as a source of primary capacity as opposed to a last resort.
Industries evolving swiftly, such as artificial intelligence, cyber, data centers, are turning first to surplus lines carriers for coverage. As these risks mature they will eventually migrate toward the admitted market. In the meantime, surplus carriers are better positioned to offer the flexible, tailored coverage these exposures require. Data centers, for example, concentrate a combination of risks that the industry would not traditionally bundle together.
Complex pharmaceutical risks represent another area where the surplus market is stepping in. Fortegra recently provided warranty coverage on a $3.5 million hemophilia drug treatment that traditional health insurers were reluctant to underwrite, a decision that proved sound. Additional opportunities in this space are already in the pipeline. Not all emerging risks are finding easy solutions, however; complex cyber and commercial auto continue to present challenges across both admitted and non-admitted markets.
Market growth is drawing new participants. Carriers including Beazley and Obsidian have entered the space, and in May, South Korea's DB Insurance Co. acquired Fortegra to advance its ambition of building a global specialty insurance platform — drawn by Fortegra's strong book of business and expanding presence in Europe and the United Kingdom. Fortegra's E&S writings represented 42% of its book in 2025, up from 38% in 2024.
Blades noted that many companies are pursuing acquisitions to strengthen their competitive position. While some business has moved back to the admitted market and the pace of E&S growth has moderated, he expects continued expansion due to the growing complexity of modern risks and the continuing need to address these exposures.