The directors and officers liability market continues to soften for most accounts, fueled by significant capacity, excess layer competition and additional capital.

Meanwhile, policyholders are enjoying broader coverage in the D&O market, where many experts say up to $1.5 billion in capacity is available.

“The D&O market's been good to us for many years, and this year was better than anticipated,” said Bill Frye director of risk management at Graphic Packaging International Inc. in Atlanta, who works with Lockton Cos. L.L.C.

“We see capacity increasing and reinsurance readily available and very cheap, and some new market entrants, so all that coupled together leads to a soft and softening market,” said Brian Wanat, New York-based CEO of the U.S. financial services group at Aon Risk Solutions.

Primary pricing is flat to down 5%, while decreases of 5% to 15% are more likely, said Simon Hodge, professional risk national practice leader at Wells Fargo Insurance Services USA Inc. in Atlanta.

Ryan Stubits, Atlanta-based vice president and account executive at Lockton's financial services practice, said the market is bifurcated between the primary and the excess layers “simply because of capacity. You have less primary players in the D&O space versus the excess, so the large players in the primary space have a little bit more command over rates.”

“Retentions are relatively stable for the most part,” said Mr. Wanat. But “some of the carriers are trying to insert higher retentions as a trade-off for some of the broader coverages.”

“The reality of the situation is that a lot of companies in the public markets have experienced growth. Stock prices and valuations are up,” said Brian Dunphy, senior managing director of the management and professional risk group at Crystal & Company in New York.

While premiums remain somewhat stagnant overall, insurers are “trying to buffer themselves from the burn point a little bit more through retentions,” he said.

Many buyers are seeing broader coverage options.

“We continue to see a broadening of coverage, including for investigation costs,” said Wells Fargo's Mr. Hodge.

“There's interest on the part of the marketplace to broaden the contract,” said Marc London, New York-based head of Beazley P.L.C.'s U.S. management liability team. “Whether that is in an effort to be more clear or to keep the product more relevant or to just capture more premiums, there is an effort on the part of many carriers to broaden the product in a measured way.”

“Terms and conditions right now are as broad as I've ever seen them,” said Mr. Dunphy. “The carriers continue to try to add a couple of widgets here and there to make their policies stand out and be different for the competition.”

A major factor in the soft market has been relatively new players in the U.S. market, including Berkshire Hathaway Inc., Lloyd's syndicates, Sydney-based QBE Insurance Group Ltd., the London market and Allianz S.E.

Mr. Stubits said the newer players are “definitely putting pressure on the legacy markets to increase capacity and lower pricing.” If you are a traditional excess insurer that is renewing an account, “you have to be concerned about a Berkshire Hathaway who has larger capacity than maybe some of the other traditional markets, that they could take a larger chunk” of the business.

Many experts say D&O pricing is less competitive for private firms and nonprofits. “It's mostly (employment practices liability) driven, but with the meltdown in 2008, there were a lot of D&O claims, too,” said Peter Taffae, managing director at Los Angeles-based Executive Perils Insurance Services.

In addition, initial public offerings and life sciences firms may find fewer insurers willing to write their business, said Beazley's Mr. London. Companies with recent weak financial performance, an activist shareholder or a cyber break also may find it more difficult to find coverage, he said.

Barring a major event, observers expect pricing to remain soft. However, consolidation “can have some impact on capacity in the D&O space, so we're watching that trend,” said Steve Boughal, New York-based vice president and chief underwriting officer of Hartford Financial Products.