We are seeing a shift towards more positive outcomes for buyers of D&O insurance compared with their experiences in the market over the last three to four years. This change is marked by lower increases in pricing (premiums) and deductibles from many providers as the D&O market becomes more sustainable and returns to profitability. Securing D&O insurance continues to be a challenge for some sectors and for businesses impacted by COVID.
While the market is getting closer to sustainability overall, profit margins are still limited for some insurers. Many report having to strengthen their prior year claims reserves during the 2021 financial year. We have also seen D&O purchasers, especially larger listed companies, changing their approach to buying insurance. Many have reduced their level of cover and compensated by increasing exposure to their company’s balance sheet.
With the D&O premium pool (including policies placed with overseas insurer providers) increasing to more than $1.2B at the end of the 2021 financial year – a 300% to 400% increase over the past three to four years – we expect to see continued growth in new insurance capital attracted to this segment of the insurance market.
Download our D&O Insurance Market Update for further information.