Matthew McLellan is managing director and D&O product leader for Marsh LLC in Washington. He recently spoke with Business Insurance Senior Editor Judy Greenwald about the directors and officers liability insurance market and its outlook. Edited excerpts follow.

Q: How would you describe the D&O market at this point?

A: Continuing to be increasingly competitive through the first quarter of 2022. We’re seeing a strong appetite for new business, which is not something that we had really seen for around 12 to 14 quarters. 

These opportunities are being sought in the excess layers for D&O programs, but also we’re starting to see a lot more movement and competition on primary layers as well, particularly for really good risks.

In general, we’re seeing a lot fewer responses from insurers that they aren’t interested than we had been, certainly, during 2020 and 2021. 

Continuing from there, traditional IPOs, de-SPAC mergers and that activity have trended down over the last quarter or so.

One thing I would caveat as well is the insurance community and the underwriters are still really very much taking a close look at risks on an individual basis. And certainly we are still seeing premium pressure and premium increases where companies might have claims.

Q: What do you see as the outlook?

A: We would anticipate that this environment, the increased competition that we’re seeing in the marketplace, will continue for the foreseeable future. However, I think that the heightened underwriting scrutiny that I was describing will also continue. 

That pivots to the regulatory activity from the SEC on climate, on cyber, on other issues (which) has really given the underwriters another set of requirements to review.

If the proposed rules are adopted, there could be certainly more claims activity from plaintiffs firms if they have a roadmap to follow. 

Q: What other issues do you consider significant?

A: Event-driven litigation will continue. We’ve seen the stock market react quite strongly to certain things, and we’ve seen financial announcements that have led to share price drops. Cyber events are unfortunately still continuing.

Another area that we’ve heard attorneys and insurance professionals point to is that the #MeToo movement claims are unfortunately still persisting.

Overall, I think the focus on the management team and the board itself is going to be at the forefront in the D&O market over the next year. This is because regulations are asking about what does management hear about certain issues — privacy, cyber, climate. What is their expertise? All that lends itself to the insurance community scrutinizing companies perhaps on a closer level there.