For the past few years, many property buyers have benefited from increased market competition. Capacity has returned across many segments, rate pressure has eased, and retail agents have more quoting options than they have seen in recent memory.
At first glance, this appears to be welcome news.
However, a growing number of insureds are discovering that more capacity does not necessarily translate into better coverage. In fact, softening markets often create one of the most overlooked risks in property insurance: the assumption that all capacity is equal.
As pricing competition intensifies, carrier selection, program structure, and claims-paying ability become increasingly important differentiators.
THE RETURN OF CAPACITY
The excess and surplus market continues to grow rapidly. U.S. surplus lines premium volume reached approximately $130 billion in 2024, representing the seventh consecutive year of double-digit growth.1
That growth has attracted both established carriers and new entrants seeking opportunities in property business. More markets generally mean:
- Increased competition
- Larger available limits
- Reduced pricing pressure
- Broader terms and conditions
For insureds, these developments can create significant savings opportunities. The challenge is that pricing often becomes the primary focus while other critical considerations receive less attention.
Another important factor behind today’s increased property capacity is the continued flow of third-party capital into the reinsurance market through catastrophe (CAT) bonds and insurance-linked securities (ILS). Strong investor appetite, combined with several years of relatively favorable catastrophe loss experience for these instruments, has expanded available reinsurance capacity and strengthened carrier balance sheets. In turn, many insurers have been able to deploy more property capacity and compete more aggressively on pricing and terms.
Historically, the property market has shifted into hard market cycles when major catastrophe losses reduce investor appetite for CAT bonds and ILS, constraining reinsurance capacity and limiting the amount of capacity carriers can deploy. Understanding this relationship helps explain why today’s favorable market conditions can change quickly following significant catastrophe activity. This influx of capital has helped create today’s more competitive property market, but it has also reinforced an important reality: the availability of capacity does not necessarily reflect its long-term quality or stability.
When reviewing quotes, two carriers may offer identical limits at similar pricing. Yet the underlying quality of that capacity may be dramatically different. Several factors should be evaluated beyond premium.
NOT ALL CAPACITY IS CREATED EQUAL
When reviewing quotes, two carriers may offer identical limits at similar pricing. Yet the underlying quality of that capacity may be dramatically different. Several factors should be evaluated beyond premium, including:
Financial Strength
According to AM Best, insurer financial strength ratings remain one of the most important indicators of an insurer’s ability to meet ongoing obligations.2 Property losses frequently involve large, complex claims that may not fully develop for months or years. A carrier’s ability to pay claims today, and remain financially stable tomorrow, matters.
Claims-Paying Reputation
A policy’s value is ultimately determined during a claim. How quickly does the carrier respond? How experienced are their adjusters? How consistently do they handle CAT events? These questions rarely appear on a quote comparison spreadsheet, but they can significantly impact claim outcomes.
THE DIFFERENCE BETWEEN AVAILABLE CAPACITY VS. WORKING CAPACITY
One of the most misunderstood concepts in today’s market is the difference between available capacity vs. working capacity. Available capacity simply refers to the amount of limit a carrier can quote. Working capacity refers to the amount of capacity a carrier can consistently support through market cycles, catastrophe events, and large-scale losses.
During favorable market conditions, many carriers are willing to deploy substantial capacity. The real test comes after a major catastrophe. History has repeatedly demonstrated that some markets remain committed while others reduce line sizes, exit classes of business, or significantly alter underwriting appetite following large loss events. For insureds with long-term insurance needs, stability is critical.
LAYERED PROGRAMS REQUIRE STRONG FOUNDATIONS
As property programs become larger and more complex, program stability becomes increasingly important. Today’s programs often involve:
- Multiple carriers
- Multiple layers
- Shared and layered participation
- Quota-share structures
While these structures create flexibility, they can also introduce complexity. If one carrier exits a layer at renewal, the entire program may need to be restructured. If multiple carriers reduce participation simultaneously due to changes in market conditions, insureds may face capacity shortages, increased pricing, or restriction in terms and conditions. This is particularly important for CAT-exposed risks who may experience a drastic change to their property program if the property market shifts.
A well-structured program should prioritize long-term stability rather than simply filling capacity at the lowest possible cost today.
THE HIDDEN COST OF CHASING PRICE
Property buyers understandably focus on premium. However, price reductions sometimes come with tradeoffs like restrictive CAT wording, reduced sublimits, more aggressive valuation provisions, narrower business interruption coverage, higher deductibles, or less favorable claims language.
A policy that appears less expensive initially may ultimately provide less protection when losses occur. This is especially important as secondary perils continue to drive property losses. According to Climate Central, the United States experienced 23 separate billion-dollar weather and climate disasters in 2025.3 Policy terms and wording often become just as important as rate when responding to these events.
QUESTIONS RETAIL AGENTS SHOULD BE ASKING
Instead of focusing solely on pricing, retail agents should evaluate the overall quality and stability of the capacity being offered. This includes understanding the carrier’s financial strength, claims-paying reputation, and long-term commitment to the property marketplace, particularly through hard market cycles. Agents should also assess whether there are meaningful differences in policy wording, determine how sustainable the program structure will be over time, and consider how the program is likely to perform following a significant loss. Ultimately, the goal is not simply to secure capacity, but to secure dependable capacity that will respond as expected when it matters most.
BOTTOM LINE
Soft markets create opportunity, but they can also create complacency. As capacity returns and competition increases, agents should resist the temptation to evaluate property programs solely on premium. Financial strength, claims performance, carrier commitment, and program design stability often prove far more important when a significant loss occurs.
CRC Specialty helps retail agents look beyond the quote sheet. Our property specialists understand how carriers deploy capacity, how property programs are built, and where coverage differences can create meaningful exposure. Whether evaluating new entrants, structuring layered programs, or negotiating critical terms and conditions, Team CRC helps agents identify the difference between available capacity and dependable capacity.
When protecting clients against large property losses, not all capacity is created equal. Connect with your CRC Specialty producer to build programs designed to perform when they are needed most.
CONTRIBUTORS
- Daniela Mills is CRC Specialty’s Head of Practice + Industry Groups.
ENDNOTES
- Seven Years of Double Digit Growth, Carrier Management, September 10, 2025. https://www.carriermanagement.com/news/2025/09/10/279329.htm
- Guide to Best’s Financial Strength Ratings, AM Best. https://www.ambest.com/ratings/guide.pdf
- US Billion-Dollar Weather and Climate Disasters, Climate Central, 2026. https://www.climatecentral.org/climate-services/billion-dollar-disasters