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Member, Beacon International Group, Ltd.
Pricing in the directors and officers liability market hardened in the second quarter of this year compared with the first quarter but rates are lower than they were during last year's second quarter, Aon Corp.'s Financial Services Group said in a report released Sept. 7.
The average price for $1 million in limits increased 13.8% during the second quarter of this year compared with the first quarter, according to Aon's Quarterly D&O Pricing Index.
However, it is not uncommon to see quarter-to-quarter fluctuations “due to the mix of business renewing at different times of the year,” Aon said in the report.
More meaningful is this year's second-quarter decrease of 4.2% the second quarter of last year, which was the smallest decrease since the third quarter of 2009, Aon said.
The report said the decline is attributable to decreases in excess rates. “We continue to see a separation between primary and excess rates,” according to the report. “Primary rates are now trending upward, but most clients' total D&O premiums are still decreasing because excess rates are still declining, albeit at a slower rate of descent.”
“Overall, we continue to have a cautious outlook on the future of D&O rates for all companies,” said the report. “Excess carriers are testing their ability to follow the actions of the primary markets and this also causes us to express caution. Those companies with specific underwriting challenges should expect a more difficult pricing environment than that of all other companies.”