D&O insurance rates decreased in third quarter: Aon Risk Solutions
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Directors and officers liability insurance pricing decreased in the third quarter primarily because of declines in pricing for excess coverage, even though primary rates increased, according to a report by Aon Risk Solutions.
However, the overall outlook is for stable pricing, according to the Quarterly Pricing Index issued Friday by the unit of Aon P.L.C.
Companies reported an overall 2.4% decline in rates for 2013's third quarter compared with a year earlier.
However, the price per million dollars of coverage increased an average of 5.7% for companies whose primary policies renewed in third quarter 2012 and third quarter 2013 with the same limit and retention, according to the report.
“Remembering that D&O programs are most often built on a layered basis, basic math would indicate that excess pricing is decreasing more than enough to compensate for the increase in primary pricing, resulting in the average total program renewing down 2.4%,” according to the report.
The report concluded, however, that while the environment will continue to be “account-specific,” on a “macro basis” the surplus of excess capacity combined with overall positive property and casualty underwriting results “will continue to make for an overall stable D&O pricing environment for public companies.”
Aon's second-quarter report found an overall 1.1% increase in programs that renewed in this year's and last year's second quarters.
