BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.
To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.
To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.
Directors and officers liability insurance policyholders continued to see rate decreases during the Jan. 1 renewals, fueled by significant capacity increases and the resulting increased competition.
With fewer initial public offerings and the collapse of the special purpose acquisition company or SPAC market, new and established insurers are battling for the remaining business.
D&O rates overall have fallen by several percentage points, with the decreases particularly strong in excess layers, where new capacity is generally focused.
Insurers are generally not increasing limits, experts say.
Rates for IPOs and de-SPAC transactions, which had risen significantly, are seeing more dramatic changes.
The majority of the commercial public D&O market has flipped, said Los Angeles-based Peter Taffae, a D&O liability insurance expert at wholesale brokerage Executive Perils Inc.
Allianz SE is seeing mid-single-digit to low double-digit rate decreases in primary and lower excess layers, with higher layers seeing the most downward pressure, said Matthew Azzara, New York-based head of management liability for North America at the insurer.
In some cases, insurers reached out ahead of renewals and asserted their interest in certain accounts, said Matthew McLellan, Washington-based managing director and D&O product leader for Marsh LLC.
“The insurers are looking for ways to differentiate themselves even more,” including by being open to wording enhancements and potentially broader coverage, he said.
The market turned more quickly than anticipated, said Andrew Doherty, New York-based national executive and professional risk solutions practice leader for USI Insurance Services LLC.
When the IPO, SPAC and de-SPAC opportunities left, insurers that were counting on that business looked for other places to grow, which added to the competitive environment, he said.
“Supply and demand continues to be the fundamental driver of the D&O insurance market,” said Priya Cherian Huskins, San Francisco-based partner and senior vice president at brokerage Woodruff Sawyer & Co.
“During the hard market we saw a lot more capacity, and that capacity is now chasing buyers, which is what’s creating a good dynamic for buyers,” she said.
“I’ve been surprised by the rapidity with which rates have fallen,” and it remains to be seen how low the floor will be, Ms. Huskins said.
First-quarter renewals “will be more telling” as accounts that had reductions last year are renewed, said Patrick Whalen, a New York-based underwriter on Beazley PLC’s executive risk team.
Some insurers “are holding the line and slowing down the decreases, but we still see an overall trend down for some time in the future,” said Larry Fine, New York-based management liability coverage leader for Willis Towers Watson PLC.
The more than 30 new D&O markets that recently entered the market “haven’t started to drop or consolidate yet,” while the increased premiums insurers had been expecting from SPACs and IPOs did not materialize, he said.
“There’s a lot of talk in the marketplace about stability,” with insurers pointing out the inventory of claims from earlier calendar years that have not yet been settled, said Tim Fletcher, Los Angeles-based CEO of Aon PLC’s financial services group in the United States.
They are “talking about trying to hold the line.” But at least for the next couple of months “we’re expecting a similar pricing environment” to the current one.
“The question for everyone is what happens in 2023,” said Kevin LaCroix, executive vice president in Beachwood, Ohio, for RT ProExec, a division of R-T Specialty LLC.
While some have predicted the market will plateau at a lower level, Mr. LaCroix said he is “a little more skeptical.”
With ample capacity, established insurers are competing for business, and newer insurers have to justify their overhead costs, which will lead to more competition, he said.