4. D&O rates skyrocket in hardening market
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Policyholders who have enjoyed declining or flat renewal rates for years saw that trend reverse for several lines in 2019, including directors and officers liability insurance.
Driven by securities class actions and litigation that often follows high-profile events, D&O buyers started seeing significant rate hikes in the first half of the year and there was little sign of any letup heading into 2020.
A story reporting on the D&O rate increases was the fourth most read risk management story on Business Insurance’s website over the past year.
Experts report there was a significant increase in securities class action litigation over the previous two years, while “event-driven litigation,” where plaintiff attorneys react to negative news such as the Boeing 737 MAX plane crashes, PG&E Corp. wildfire losses, the #MeToo movement and cyber breaches, have fueled litigation as well.
Price hikes of up to 50% were common, with some outliers even higher, and firms with a recent initial public offering, financial troubles or a claims history in particular experiencing increases.
Insurers are drawing firm lines as to the rate hikes they need to achieve, while their interest in new business has dwindled.
There is no immediate end in sight, with experts predicting the hard market will continue over the next 18 to 24 months.
The rising rates are affecting many other lines, too, according to various industry organizations. In its third-quarter pricing survey, the Council of Insurance Agents & Brokers reported that premium rates for large commercial accounts increased 7.6% on average.
