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Insurance – director’s and officer’s liability insurance
Directors’ and Officers’ Liability Insurance
- a more favourable market
Since 2018, the Directors’ and Officers’ (D&O) insurance market has been extremely difficult. Reduced capacity and insurer appetite saw substantial premium increases. Despite the pricing hikes, demand for D&O insurance continues, as directors and officers face heightened exposure to emerging risks - from regulatory scrutiny through to ESG and cyber security.
Light on the horizon
The 2022 outlook is looking brighter. Our inaugural Howden Directors’ and Officers’ Liability Insurance report, entitled ‘Light on the horizon’, released earlier this year told of how the D&O insurance market is showing signs of becoming ‘softer’, creating more favourable buying conditions in the London market.
Plateauing premium prices
The start of 2022 signalled a positive change in the D&O market environment, with insurer sentiment geared towards growth - driving competition and moving the market from its hard position to one of transition. All of which is good news for D&O buyers.
Premium prices are already starting to plateau and even move downwards, following improved insurer appetite and more capacity being available, with a wave of new insurers and ESG-propelled capacity initiatives entering the market.
We have seen some meaningful rate reductions, especially where sectors were heavily penalised by insurers given their Covid exposure, and we expect to see fewer premium increases at renewal.
We know of underwriters that are looking to offer large savings on some renewals. Even as early as January 2022, we saw insurers uncharacteristically slashing premium rates on those policies that had gone through two years of dramatic premium hikes. These same insurers would have declined the risk the previous year based on lack of appetite. But, the transitional nature of the market and rating differential across sectors does mean that this is not the norm.
Emerging claims trends
Over the last decade individual directors and officers have been looked at by regulators, shareholders and consumers and this is a trend set to continue. The sentiment is that those running companies must be held responsible for their decisions and conduct, whether it has financial implications or also other non-financial conduct that drives culture and behaviour.
Current emerging trends that are concerning insurers include: w Environmental Social Governance (ESG) issues such as climate related disclosures, and diversity and inclusion. w The potential rise in insolvencies following on from the phasing out of government support schemes combined with current economic conditions. w Cyber-attacks and data breaches.
To learn more about the outlook for the D&O market, read our full report at www.howdengroup.com/uk-en/2022directors-and-officers-liability-insurancereport
For more information on this topic, please speak to your usual Howden Consultant in the first instance or visit www.howdengroup.co.uk for other contact options.
