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Directors & officers liability insurance premium rates will continue to decline this year, says Fitch Ratings, in a brief report issued Friday.
Although poorer overall U.S. property/casualty industry results and large catastrophe-related losses in property lines are likely to lead to pricing increases for several individual market segments this year, D&O market pricing “is likely less affected by these broader market circumstances,” says the report.
The report noted there are “cautionary signs on several fronts” for the market, led by a growing preponderance of securities class action lawsuits.
Public company executives’ liability exposure continues to evolve, said the report, with courts showing a greater inclination to hold individuals accountable for corporate crimes, following the 2015 Yates memorandum. The memo by former Deputy Attorney General Sally Quillian Yates stresses individual responsibility in corporate wrongdoing.
The report says, “D&O underwriters are typically larger, multiline insurers that can absorb or offset potential large losses with results from other segments.
“As such, the likelihood that the risks from the D&O segment will individually drive insurer ratings are limited outside of extreme crisis periods and events. Additionally, some pricing risks could be mitigated should M&A activity influence market competition.”
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.