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D&O prices surge: Aon

D&O prices surge: Aon

Excluding three clients with exceptionally higher rates, the price per million for directors & officers liability insurance for Aon PLC clients increased 29% in the third quarter compared with the year-earlier period, the brokerage said in a report issued Thursday.

Peter Trunfio, New York-based client data & analytics officer with Aon’s financial services group, said he anticipates data for the fourth quarter and for 2020 will continue to show price hikes.

The 29% increase excludes third quarter results for two “very large communications services clients” whose premiums increased dramatically during the quarter because of significant claims activity, regulatory issues and “headline risks,” according to the report.

It also excludes results of another large client with material claims activity and ongoing investor concerns over financial performance, according to the report. Mr. Trunfio would not identify the clients.

If those clients’ results were included the hike would have been 69.7%, according to the report.

Similarly, the price per million for clients who renewed in both 2019 and 2018’s third quarter increased 22.6% excluding those three clients, the report said. With these clients’ results included, the hikes would have been 64.2%.

Only 1% of primary policies renewing with the same limit and deductibles had a price decrease for the third quarter, while 90% had a price increase, according to the report.

The report said 85.2% of primary policies renewed with the same limit; 64.8% renewed with the same deductible; 59.8% renewed with the same limit and deductible; and 95.1% renewed with the same insurer.

During the second quarter, the price per million for Aon PLC clients increased 17.1% from the year-earlier period. The price per million for clients who renewed in both 2019 and 2018’s second quarter increased 9.4%.

Mr. Trunfio said he anticipates results similar to the third quarter in the fourth, “if not even a little bit higher.” He said he also expects continuing higher rates this year and for the “foreseeable future. This is not necessarily a capacity-driven hard market. I think it’s a results-driven hard market,” he said.

Industry observers have said risk managers at publicly held companies are facing double-digit rate hikes on their directors and officers liability insurance program renewals, a trend that is expected to continue at least through this year.