Best’s Special Report: Pricing Softens for U.S. Directors and Officers Liability Insurance as Premiums Continue to Decline
2024年6月20日 - 10:25PM
ビジネスワイヤ(英語)
Favorable underwriting results in the U.S. directors &
officers (D&O) liability line will likely add downward pressure
on rates amid decreased demand in the segment, according to a new
AM Best report.
Direct premium on a monoline basis in the D&O liability
segment declined for a second straight year in 2023, according to
the Best’s Special Report. The underwriting performance in the
segment has been favorable for three straight years, with last
year’s direct loss ratio of 50.8 notching its best level in a
decade.
“Following more than 10 years of soft market conditions, which
left most monoline D&O risks underpriced, the significant
increase in pricing from 2020 and 2021 in particular led to a
notable decline in the direct loss ratio,” said David Blades,
associate director, AM Best.
According to the report, strategic changes in the way insurers
are underwriting current D&O liability risks suggest the loss
ratio may continue to decline over the near term. In recent years,
underwriters have largely steered clear of providing the high
limits per individual risk that were more commonplace during the
2010s and that factored heavily into the adverse loss severity
trends of the past decade.
Nevertheless, headwinds such as rising settlement and litigation
costs, growing exposures from new technologies, and the expectation
that prices will continue to fall in 2024 counter some of these
positives and contribute to AM Best’s current negative outlook for
the U.S. D&O liability segment.
Chief among the D&O report’s other findings:
- Broadened contract terms and the growth of social inflation,
litigation funding, legal advertising and risk exposures for
corporate D&O could negatively affect calendar year
results.
- Excess and surplus lines writers benefited from the hard market
conditions in 2020/2021, resulting in a larger share of D&O
liability business being written on a non-admitted basis and led to
favorable calendar-year results.
- Disclosure requirements related to potential casualty
catastrophe exposures such as cyber, emerging risks such as PFAS,
or climate-related litigation could lead to an increase in lawsuits
for corporate D&O and worsen loss severity.
To access the full copy of this special report, please visit
http://www3.ambest.com/bestweek/purchase.asp?record_code=343840.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
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David Blades Associate Director, Industry Research +1 908 882
1659 david.blades@ambest.com Christopher Graham Senior
Industry Research Analyst +1 908 882 1807
christopher.graham@ambest.com Christopher Sharkey Associate
Director, Public Relations +1 908 882 2310
christopher.sharkey@ambest.com Al Slavin Senior Public Relations
Specialist +1 908 882 2318 al.slavin@ambest.com