SAN DIEGO — Buyers are seeing more competitive directors and officer liability market conditions, driven by increased capacity and reduced demand due to a slowdown in IPO activity, several panelists said Thursday at the Professional Liability Underwriting Society’s 35th annual conference.

The industry is in a pretty good place when it comes to rate adequacy, said Marek Krowka, chief underwriting officer, North America financial lines, at American International Group Inc.

However, rate adequacy is more stable in the primary market than the excess market, where there’s been a lot of new capacity and competition, Mr. Krowka said. “It’s causing some concerns around rate adequacy on excess business,” he said.

Over the last three years the rate change in the market has been dramatic, and the point of rate adequacy was probably met, said Jonathan Reiner, executive vice president at Ryan Specialty LLC.

“It leads us to believe it was a bit of an overcorrection, judging by how much rate is being given back to clients afterwards,” Mr. Reiner said.

If it continues in this direction the market might get to the point of “overcorrection in the wrong direction,” he said.

Business that flows through the wholesale market tends to see more dramatic rate impact versus a traditional retail portfolio, and IPO SPACs business has seen some of the most substantial rate decreases, Mr. Reiner said.

Capacity is not the No. 1 factor driving recent rate decreases, said Yera Patel, head of casualty and financial lines claims and analytics for Inigo Ltd., a London-based specialty insurer and reinsurer.

“The IPO market and the stock market has dried up. That’s really the main factor,” Ms. Patel said.

Another factor is that long-established markets that had pulled back capacity decided to lean back in and take capacity, she said.

Buyers set their budgets in July and August for the entire year, so having transparency with underwriters is important, said Beth Goldberg, vice president and chief risk officer at Northwell Health, a health care network based in Great Neck, New York.

“Make sure when you’re underwriting you don’t spread the rate like peanut butter,” Ms. Goldberg said.

Buyers want to be valued, she said. “Your clients do have budgets, so you have to be very transparent in what you’re saying when you come to the table,” she said.

With new market entrants, trust is important, she said. “I want to see they have their whole strategy defined because I don’t want to see flip-flopping,” she said.

The panel “Fact or Fiction About the D&O Market” was moderated by Gregory Spore, managing director and center of excellence leader at Guy Carpenter & Co LLC.