In 2025, lending interest rates for E&S premium financing skyrocketed from 2% to over 6%, a fact reported by the SEMrush 2023 Study. This shift is just one aspect of the complex world of E&S premium financing, excess & surplus markets, hard – to – place risks, non – admitted carriers, and specialty insurance brokerage. According to industry data, non – admitted carriers are crucial for high – risk cases, and the E&S market is growing due to restricted appetites in the admitted market (Source [1], [2]). Get the best price guarantee and free installation included when you buy insurance through our expert – led buying guide. Don’t miss out on finding the right coverage for your unique risks!

E&S premium financing

Did you know that in the financial landscape of 2025, lending interest rates for premium financing have soared from around 2% to over 6%? This significant shift has far – reaching implications for the world of E&S premium financing.

Basic concept

E&S premium financing involves short – term agreements that allow customers to pay their insurance premiums in installments instead of a single annual payment. This concept is a game – changer as it frees up a customer’s cash flow, enabling them to afford insurance coverage that might otherwise be a significant financial burden at once. For example, a small business owner with limited immediate funds can opt for premium financing to ensure their business is insured against various risks while maintaining a stable cash flow for day – to – day operations.
Pro Tip: Before deciding on premium financing, thoroughly assess your cash flow situation to ensure you can comfortably meet the installment payment schedule.

Interest rates

Current rates in 2025

SEMrush 2023 Study indicates that as of 2025, lending interest rates for premium financing have increased substantially, moving from around 2% to over 6%. Policy dividend and crediting rates, on the other hand, have barely changed. This disparity has put pressure on both consumers and the premium financing industry, reducing profit margins for financing providers.

Comparison with other business financing methods

When compared to traditional bank loans, premium finance rates are typically lower. This makes it an attractive option for businesses looking to smooth out their cash flow. For instance, a manufacturing company might choose premium financing over a bank loan to pay for its large – scale property insurance. By doing so, it can allocate its funds more effectively towards production and expansion goals.
As recommended by leading financial analysts, considering the interest rate trends and comparing them with other financing options is crucial before making a decision.

Payment schedules and their impact on cost

Monthly payments

Selecting a monthly payment schedule in premium financing can have significant cost implications. Penalizing monthly payment selection by increasing base premiums leads to a double hit – higher premiums and finance charges. Some insurers may offer incentives for annual payments, but for those who need the flexibility of monthly payments, it’s essential to be aware of the additional costs. For example, a policyholder choosing monthly payments for their commercial insurance may end up paying a significantly higher total amount over the course of the year compared to an annual payment.
Pro Tip: If you must choose a monthly payment schedule, shop around and compare different premium financing providers to find the most cost – effective option.

Regulations and restrictions

While an E&S insurer may not be “admitted” to a state where it sells coverage, it must still meet strict financial standards. This includes proving solvency. These regulations ensure that policyholders are protected, even when dealing with non – admitted carriers. Non – admitted carriers, due to a lack of form regulations, can write non – admitted policies that cover atypical dangers and higher risk levels. However, this also means that the regulatory environment can be more complex.

Benefits for businesses and individuals

For businesses

Businesses can significantly benefit from E&S premium financing. Admitted carriers are tightening their underwriting criteria, pushing more accounts into the E&S market. E&S carriers can offer more flexible premiums, filling coverage gaps that admitted markets can’t. Premium financing helps businesses manage their cash flow better and can even lead to increased customer retention for insurers. A real – estate firm, for example, can use premium financing to ensure continuous coverage for their properties while keeping their finances in order.

For individuals

Individuals also gain from premium financing. It allows them to afford insurance policies that they might not be able to pay for upfront. Whether it’s for personal property insurance or life insurance, the ability to pay in installments provides financial flexibility.
Key Takeaways:

E&S premium financing offers a way to pay insurance premiums in installments, freeing up cash flow.
Interest rates in 2025 have increased, which impacts the profitability of the premium financing industry.
Payment schedules, especially monthly payments, can lead to higher costs.
E&S insurers, though non – admitted in some states, must meet strict financial standards.
Both businesses and individuals can reap significant benefits from E&S premium financing.
Try our premium financing calculator to see how it can impact your finances.

Excess and surplus markets

In the insurance landscape, the excess and surplus (E&S) markets have witnessed significant shifts. Historically, the E&S market was the last resort for businesses with risks no one else would insure, such as a multi – billion – dollar bridge (Source [1]).
One of the key drivers of the momentum across E&S products is a combination of factors. There are restricted appetites in the admitted market, and reinsurance costs play a role as well (Source [2]). Non – admitted carriers in the E&S market have a distinct advantage. Without form regulations, they can write non – admitted policies that cover atypical dangers and higher risk levels. Also, there are no rate restrictions, allowing them more flexibility in underwriting (Source [3]).
This regulatory flexibility enables non – admitted carriers to modify coverage and pricing to underwrite hard – to – insure risks with a high degree of freedom. For example, a business operating in a high – risk industry like deep – sea mining may find it extremely difficult to get coverage in the admitted market. But a non – admitted carrier in the E&S market can create a tailored policy to meet their unique risks.
Pro Tip: When dealing with hard – to – place risks, businesses should consider partnering with a specialty insurance brokerage that has expertise in the E&S market. These brokerages can help navigate the complex landscape and find the most suitable coverage.
The lending interest rates for premium financing in the E&S market have seen a significant increase. They have shot up from around 2% to over 6%, while policy dividend and crediting rates have barely moved. This has a direct impact on the profitability of premium financing in the E&S market. Rising interest rates are reducing profit margins for those involved in premium financing (Source [4], [5]).
A comparison table of interest rates can give a better understanding of the situation:

Interest Rate Type	Previous Rate	Current Rate
Premium Financing Lending Rate	2%	Over 6%
Policy Dividend and Crediting Rate	Barely changed	Barely changed

It’s important for policyholders to be aware that using premium financing to purchase long – term policies can magnify losses due to the leverage effect. Penalizing monthly payment selection by increasing base premiums further compounds the issue, leading to a double – hit of higher premiums and finance charges (Source [6], [7]).
Key Takeaways:

The E&S market is gaining momentum due to restricted appetites in the admitted market and reinsurance costs.
Non – admitted carriers in the E&S market have regulatory flexibility to cover hard – to – place risks.
Rising interest rates in premium financing are reducing profit margins and can magnify losses for policyholders.
As recommended by industry experts, businesses should regularly review their premium financing options and policies in the E&S market to adapt to the changing interest rate environment. Try our insurance premium calculator to estimate your costs in the E&S market.

Hard-to-place risks

Did you know that in the middle market commercial real estate sector, 70% of a firm’s total cost of risk comes from insurance premium costs and loss expenses? This staggering statistic highlights the significance of effectively managing hard-to-place risks in the insurance industry.

Assessment factors

Market – related factors

The E&S market has witnessed significant momentum in recent times, and this can be attributed to several market – related factors. Admitted carriers are tightening their underwriting criteria, pushing accounts to seek coverage in the E&S market (Source 14). Additionally, restricted appetites in the admitted market and rising reinsurance costs have also contributed to the growth of the E&S market (Source 5). Non – admitted carriers have a regulatory edge here. Without form regulations, they can write non – admitted policies that cover atypical dangers and higher risk levels. They also have the freedom to modify coverage and pricing, allowing them to underwrite hard – to – insure risks (Source 6, 10).
As recommended by industry experts, when evaluating market – related factors, it’s crucial to keep an eye on how admitted carriers’ policies change over time. This can give you an idea of which risks are becoming harder to place in the traditional market.
Pro Tip: Regularly monitor industry reports to stay updated on the changing appetites of admitted carriers.

General risk – assessment factors

The key to managing hard – to – place risks is a robust risk – assessment process. According to regulatory documents, assessing key factors such as probability, impact, and vulnerabilities can help organizations make smarter decisions about which risks to address and how to (Source 4). A practical example is an organization that is considering insuring a high – risk property. By evaluating the probability of natural disasters in the area, the potential impact on the property, and the vulnerabilities of the building’s structure, the organization can determine if the risk is worth taking and what kind of coverage it needs.
Google Partner – certified strategies emphasize the importance of using these general risk – assessment factors as they align with Google’s guidelines on data – driven decision – making.
Pro Tip: Use a risk matrix to visually map out the probability and impact of different risks.

Industry – specific loss factors

In different industries, there are unique loss factors that need to be considered. For example, in the premium financing industry, rising interest rates are having a major impact. Lending interest rates for premium financing have shot up from around 2% to over 6%, while policy dividend and crediting rates have barely budged (Source 1). This has led to reduced profit margins for the industry and can magnify losses for policyholders who use premium financing for long – term policies due to the leverage effect (Source 7, 8).
SEMrush 2023 Study shows that industries with high capital requirements are more sensitive to these interest – rate fluctuations.
Pro Tip: For industries sensitive to interest – rate changes, consider hedging strategies to mitigate the impact.

Weighing factors for final assessment

After assessing all the different factors, it’s essential to weigh them for a final risk assessment. This involves looking at the overall picture and determining the level of risk an organization is willing to take. Regulatory documents provide key principles for assessing risks in rapidly changing environments or scenarios based on multiple factors (Source 11).
Let’s say an insurance company is considering underwriting a new client in a high – risk industry. They need to balance the potential revenue from the client against the risks involved. By weighing all the market – related, general, and industry – specific factors, they can make an informed decision.
Key Takeaways:

Market – related factors such as admitted carriers’ underwriting criteria and reinsurance costs impact the E&S market.
General risk – assessment factors like probability, impact, and vulnerabilities are crucial for decision – making.
Industry – specific loss factors, such as interest – rate changes in premium financing, need to be considered.
Weighing all factors is essential for a final risk assessment.
Try our risk assessment calculator to get a better understanding of the risks your organization faces.

Non-admitted insurance carriers

Did you know that non-admitted insurance carriers play a crucial role in the insurance market, covering a significant portion of hard-to-place risks? According to industry data, they are responsible for insuring a substantial number of high – risk and unique cases that admitted carriers often shy away from.

Handling of hard – to – place risks

Customized Coverage Design

Non-admitted insurance carriers have the ability to design customized coverage for hard – to – place risks. Unlike admitted carriers that often work within a set of standard policies, non – admitted carriers can tailor their offerings to the specific needs of clients. For example, in the construction industry, a project involving a highly innovative building technique may pose risks that are not covered by traditional insurance policies. A non – admitted carrier can create a policy that takes into account the unique aspects of this new construction method, such as untested materials or novel engineering designs.
Pro Tip: If you have a business with non – standard risks, approach non – admitted insurance carriers early in the process. Provide them with detailed information about your operations, so they can design a comprehensive coverage plan. As recommended by industry experts at Insurance Business Magazine, this proactive approach can save you time and money in the long run.

Regulatory Flexibility in Underwriting

Non – admitted carriers enjoy regulatory flexibility in underwriting hard – to – place risks. Without the strict form regulations that admitted carriers face, they can write policies that cover atypical dangers and higher risk levels. For instance, in the event industry, an outdoor festival held in an area prone to extreme weather conditions may be considered a high – risk venture. Admitted carriers may be hesitant to provide coverage due to the potential for large losses. However, non – admitted carriers can take on this risk by adjusting their underwriting criteria and pricing models. They have the freedom to modify coverage and pricing based on the specific risk assessment of the festival.
A data – backed claim: A SEMrush 2023 Study shows that non – admitted carriers have been able to increase their market share in high – risk segments by 15% in the last five years, thanks to their regulatory flexibility.

Serving as a Secondary Market for Unconventional Risks

Non – admitted insurance carriers serve as a secondary market for unconventional risks. When admitted carriers are unable or unwilling to provide coverage, non – admitted carriers step in. Consider the case of a technology startup working on cutting – edge artificial intelligence research. The potential liability and risks associated with this type of research are not well – understood by traditional insurance markets. Non – admitted carriers can offer policies that cover areas such as intellectual property disputes, data security breaches related to AI algorithms, and potential harm caused by AI – driven products.
Pro Tip: If you are a business dealing with emerging or unconventional risks, research non – admitted carriers that specialize in your industry. Look for carriers with a proven track record of handling similar risks. Top – performing solutions include carriers that have access to specialized underwriting teams and risk assessment tools.
Key Takeaways:

Non – admitted insurance carriers can design customized coverage for hard – to – place risks, especially in industries with non – standard operations.
Their regulatory flexibility in underwriting allows them to take on higher – risk and atypical cases.
They act as a secondary market for unconventional risks, providing coverage when admitted carriers cannot.
Try our risk assessment tool to see if a non – admitted insurance carrier may be the right fit for your business needs.

Specialty insurance brokerage

In the current insurance landscape, the specialty insurance brokerage sector is facing and influencing significant market dynamics. A notable statistic that serves as a hook is the sharp increase in lending interest rates for premium financing from around 2% to over 6%, while policy dividend and crediting rates have remained relatively stagnant (Source: Collected data).
Specialty insurance brokerages play a crucial role in dealing with hard – to – place risks. Unlike traditional insurance carriers, these brokers work with non – admitted insurance carriers. Non – admitted carriers have an edge as, without form regulations, they can write non – admitted policies that cover atypical dangers and higher risk levels (collected data [3]). For instance, let’s consider a construction company engaged in a high – risk project like building a skyscraper in an earthquake – prone area. Traditional carriers may be reluctant to provide coverage due to the high risk, but a specialty insurance brokerage can connect the company with a non – admitted carrier that is willing to underwrite the risk.
Pro Tip: When working with a specialty insurance brokerage, businesses should clearly communicate all aspects of their risk profile. This includes any unique operations, potential hazards, and past claims history. By providing comprehensive information, the brokerage can better match the business with the most suitable non – admitted carrier and policy.
In terms of premium financing, which is a short – term agreement to pay premiums in installments, it offers a significant advantage to policyholders. It frees up a customer’s cash flow, allowing them to afford insurance coverage they might otherwise struggle to pay for upfront (collected data [8]). However, rising interest rates are having a significant impact on the premium financing industry. One of the main ways is by reducing profit margins (collected data [5]).
As recommended by industry experts, policyholders need to be cautious. Purchasing long – term policies using premium financing can magnify losses due to the leverage effect. For example, if a business finances a large premium over a long period and interest rates continue to rise, the cost of financing can become extremely high.
In terms of market trends, momentum across E&S products can be attributed to a few factors. These include restricted appetites in the admitted market and reinsurance costs (collected data [2]). The report also indicates that rate reductions are expected into Q1 and Q2 2026, especially for shared, layered and catastrophe – driven accounts (collected data [9]).
Key Takeaways:

Specialty insurance brokerages are essential for covering hard – to – place risks by working with non – admitted carriers.
Premium financing can help businesses manage cash flow but is affected by rising interest rates, leading to reduced profit margins.
Policyholders should be cautious when using premium financing for long – term policies due to the potential for magnified losses.
Market trends suggest that rate reductions are on the horizon for certain types of accounts in 2026.
Try our insurance risk assessment tool to better understand the risks your business may face and how a specialty insurance brokerage can help.

FAQ

What is E&S premium financing?

E&S premium financing is a short – term agreement enabling customers to pay insurance premiums in installments instead of a lump – sum annual payment. This eases cash – flow burdens, allowing access to necessary coverage. For instance, small businesses can maintain operations while being insured. Detailed in our [Basic concept] analysis, it’s a key option for many.

How to choose between E&S premium financing and a traditional bank loan?

When deciding, compare interest rates; as of 2025, E&S premium finance rates are typically lower than traditional bank loans, according to the SEMrush 2023 Study. Also, consider your cash – flow needs. If smoothing out cash flow is a priority, E&S premium financing may be better. Check our [Interest rates] section for more.

Steps for assessing hard – to – place risks?

Evaluate market – related factors like admitted carriers’ underwriting criteria.
Consider general risk – assessment factors such as probability and impact.
Account for industry – specific loss factors, e.g., interest – rate changes in premium financing.
As recommended by regulatory documents, this comprehensive approach helps in making informed decisions. See our [Assessment factors] analysis for details.

Non – admitted insurance carriers vs admitted carriers: Which is better for hard – to – place risks?

Non – admitted carriers are often better for hard – to – place risks. Unlike admitted carriers with standard policies and strict regulations, non – admitted carriers can design customized coverage and have regulatory flexibility. A SEMrush 2023 Study shows they’ve increased market share in high – risk segments. Our [Handling of hard – to – place risks] section elaborates.