Finally, some good news for most Public, Private, and Non-Profit company D&O buyers! After a number of years of reduced coverage, tightening underwriting, and increasing prices often referred to as a “hard” market, the Directors & Officers (D&O) Insurance market is finally loosening – slightly.
A few things to know about the current state of the D&O market:
Not all segments are loosening at the same rate
Better underwriting results and new entrants have contributed to increased competition and improved prices, but the impact has not been spread evenly. Some narrow segments remain tight, such as coverage companies with employment claims and for SPACs.
Public Company D&O is loosening most
Public company D&O saw the most significant tightening early in the cycle from increasing frequency and severity of securities litigation. As these losses have mitigated and underwriting results have improved, competition has started to drive pricing down slightly (here, here).
Private Company D&O rates are still increasing, but at a slower rate
According to CRC’s Redy Index, private company D&O pricing continues to increase. The causes of loss in private company D&O are typically broader, frequency higher and severity less than public company D&O. While results have improved somewhat, pricing increases in the 6% – 7% range are normal, down from approximately 13% year over year.
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