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D&O liability prices up sharply: Marsh report

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COVID-19’s full impact on directors and officers liability pricing remains to be seen, but Marsh LLC clients are already experiencing significant price hikes that are expected to continue, the broker said in a report issued Wednesday.

Total program pricing for public companies increased 44% in this year’s first quarter, while primary rates rose 26%, the report said. Total pricing increased for 95% of Marsh clients who renewed their D&O insurance programs in the first quarter, while primary pricing increased for 89% of clients, according to the report, “COVID-19 Pandemic Adds to Rate Pressure for D&O buyers.”

The report said monthly figures indicate an even sharper upward trajectory. Primary rates, for instance, increased 30.9% in April and 36.3% in May, but this does not include data for the many companies renewing during those months that increased their retentions by more than 50%, the report said. If these are added, the primary rate increases were 44% in April and 47.7% in May.

Rates will accelerate at least through the third quarter, the report predicts. “Insurers, however, have made clear to buyers that these trends do not reflect a short-term restoration nor correction of price increases,” and that current conditions “will persist for several years, with the COVID-19 pandemic only adding to already worsening conditions.”

The report also said employment practices liability price increases in the first quarter were the largest in two years, with pricing on primary layers increasing 5.3% and total program pricing rising 6.3%.

The report noted that underwriters are still contending with #MeToo-related claims, while COVID-19 has added to their concerns.