D&O market continues to see across the board increases

The D&O market is still experiencing heavy price increases “across the board” with listed entities hit hardest, an expert has said.

Robyn Melean, FINEX account director at Willis Towers Watson, said that the D&O market is still experiencing changing pricing with premium increases continuing over the first quarter of 2018.

“Premium increases range from 50% to 300% and in some instances more depending on the extent of premium reductions secured in previous years,” Melean told Insurance Business. “The D&O market has proven to be significantly unprofitable for insurers for a number of years now; as a result, insurers are seeking significant premium increases to offset claims activity.”

Melean said that the current market cycle is “markedly different” to those of the past thanks to the struggles in the Side C area of the market as insurers look to “re-set their minimum rates.”

“Premiums for private company D&O and management liability policies also continue to increase but to a lesser extent, typically in the range of 20% upwards,” Melean continued.

Over the first quarter of the year, Melean said that insurers have continued to review each risk on a case by case basis with deductibles, particularly in Side C, rising alongside premiums.

“Insurers are closely managing the amount of capacity provided, particularly for listed entities, with most offering no more than $10 million. This has resulted in a requirement for an additional number of insurers to complete larger placements and increased use of co-insurance,” she said.

Looking ahead, Melean said that she expects the market to remain “volatile” over the course of 2018 with conditions expected to continue to deteriorate.

“Insurers are focusing very closely on continuous disclosure, how clients discharge their obligations and are making more enquiry of processes and practices,” Melean said. “It is important for all insureds to have early engagement with their D&O insurer and to formulate a strong strategy to differentiate your risk and mitigate the severity of premium increases.”