Directors and officers liability insurance rates have stabilized after several years of increased rates.

Experts anticipate that rates overall will remain relatively flat for at least the first half of the year, after which there may be reductions.

They say that there is increased competition, with new entrants in the higher excess layers — the market segment they are focusing on for now — but rates are relatively flat in the primary layers.

They said problematic areas in the D&O sector include coverage for SPAC-related transactions, cryptocurrency, cannabis, environmental, initial public offerings and cyber risks and plan fiduciary fee litigation, among others.

John M. Orr, D&O liability product leader for Willis Towers Watson PLC in San Francisco, said, “The market is much improved from just a year ago.

“We’re still not seeing flat renewals or decreases with regularity, but they are occurring with more frequency for risks that were overcorrected in the hard market.”

Rates are stabilizing, said Kristin Kraeger, Boston-based managing director at Aon PLC. “We didn’t necessarily see expansion of coverage, but we saw the terms remain consistent,” she said.

Companies with solid operating results are seeing rates and self-insured retentions leveling, and in some cases there will be rate decreases, “particularly as the year progresses,” said Priya Cherian Huskins, San Francisco-based partner and senior vice president at broker Woodruff Sawyer & Co.

“There is differentiation happening in the market more now than there has been in the past,” said Brian Dunphy, senior vice president and managing director at Alliant Insurance Services Inc. in New York.

“Underwriters are looking at select accounts as truly good opportunities and writing them closer to flat, or flatter, than in years past,” he said, adding that while some accounts are still being regarded with “a more jaundiced eye” they are not being increased as much as in the past.

Matthew McLellan, Washington D.C.-based senior vice president and D&O product leader for Marsh LLC, said he saw “a lot more appetite for new business” at year-end 2021, which he expects to continue into this year.

Over the next six months, unless the omicron variant disrupts the economy, “we should see more of that new stabilization,” said Andrew Doherty, New York-based national executive and professional risk solutions practice leader for USI Insurance Services LLC.

“I hope to see things stay stable,” said James Rizzo, New York-based underwriter for U.S. executive risk at Beazley PLC. He added, however, that the D&O market is operating in a higher claims environment, with a variety of perils and severity and defense costs inflation.

Derek Lakin, New York-based senior vice president and national SPAC practice co-leader for Lockton Cos. Inc., said traditional legacy insurers “have had two to three renewal cycles to get their premiums” to a sustainable level.

“We’ve basically knocked on the door of equilibrium, unless there is another big surprise” in the form of a macro event, such as a financial crisis, significant SPAC-related litigation, or an event-driven issue such as a new COVID-19 variant, he said.

Peter Taffae, a D&O liability insurance expert at Los Angeles-based wholesale brokerage Executive Perils Inc., said industries directly affected by the pandemic, including hospitality, entertainment and food, “still have challenging renewals.”

Nora Hattauer, New York-based head of management liability for national accounts at American International Group Inc., said in a statement that last year AIG increased its exclusion of antitrust coverage to include all private and not-for-profit entities, where historically full entity coverage had been available. In some cases, coverage will still be available on a sublimited basis, and this may become more of a trend as scrutiny by regulators increases, she said.

Rates vary by position on the tower, said Dan Edwards, vice president at QBE in New York. The primary layer “is still slowly gaining a little bit of positive rate, and the lower excess is stabilizing and flattening. We are starting to see hints of potential softening and maybe even some rate decreases.”

“As you move up the tower to those mid and high excess layers, that is normally where the new capacity is playing, so you have competition out there” that is creating rate pressures, Mr. Edwards said.

The new entrants “are picking their spots, choosing to be most active in high-attachment excess and avoiding certain sectors,” said Kevin LaCroix, executive vice president in Beachwood, Ohio, for RT ProExec, a division of R-T Specialty LLC. He said more entrants are expected.

Bill Dixon, Edison, New Jersey-based Amwins Group Inc. group executive vice president and group practice leader professional lines, said, “Some of the new capacity has now reached a maturation level where they might become more aggressive” and are in a position to consider entering the primary markets, where they may drive pricing down “a little bit,” he said.