Competition stiff, but primary rates start to firm in D&O marketPosted On: Jan. 24, 2018 1:46 PM CST
The directors and officers liability market continues to be intensely competitive, with many insurers still pushing to grow their D&O books, although primary rates have started to firm, says A.M. Best Co. Inc., in a report distributed Wednesday.
While new market entrants’ underpricing diminished in 2017 compared to 2016, “abundant capacity continued to pressure rates downward,” said the report titled Intense Competition and Tough Legal Environment Pressure D&O Insurers, by Oldwick, New Jersey-based A.M. Best.
The report said while the D&O market was hard from 2011 to 2015, and most insurers reported rate increases, D&O rates began to flatten in 2016, with that trend continuing through 2017’s third quarter.
The report said Side A excess coverage in particular remains very attractive and exceptionally competitive, leading to some of the largest rate decreases in the line.
It adds, however, that rising losses and lawsuits are causing some D&O prices to harden. In addition to primary rates beginning to firm, companies close to launching initial public offerings and those in the life sciences and technology industries have experienced rate increases.
The report says A.M. Best expects loss costs to continue to trend upward in 2018, with competitive rates pressuring premiums and profitability.