Public companies see 20% decrease in D&O premiums: BRP

Nasdaq Inc.-listed public companies reported a 20.3% decrease in directors and officers liability premiums for their first $5 million of coverage for 2022, says a broker report issued Wednesday.

The survey of 350 public companies by BRP Group Inc., the parent company of broker Baldwin Risk Partners LLC, which was conducted in collaboration with Nasdaq, found that when the additional softening of excess rates is included, the premium reduction for the entire program decreased by 35%.

The survey found that health care and technology in particular benefited from last year’s D&O rate reductions. Health care companies reported a 21.2% decrease, while those that had initial public offerings in the past three years reported a 25.8% decrease and nonrecent IPOs had a 14.5% increase.

Technology companies reported a 30.3% decrease, with recent IPOs reporting a 36.7% decrease, and non-recent IPOs, a 12% decrease.

The survey found companies paid considerably more premium when they had an initial public offering or a deSPAC, which is when private companies go public by merging with special-purpose acquisition companies, in the last three years. 

For $5 million in primary coverage, for instance, the average premium for companies with a market capitalization of up to $100 million was $264,182, while the average premium for a company with a recent IPO was $515,094, and for a deSPAC was $433,125.

There was also a significant difference in retentions, with the overall average retention for companies with up to $100 million in market capitalization $1.3 million, while it was $4.1 million for a recent IPO and $3 million for a deSPAC.

Among other survey results, in what it said could be a result of the overall rate increases the past few years combined with lower company valuations, 25% of companies decreased their overall limits, while 23% increased them and it remained the same for 52%, according to the survey.