Interest rates for liability insurance for board members and salaried employees have stabilized after several years of higher interest rates.
Experts estimate that overall interest rates will remain relatively unchanged at least during the first half of the year, after which there may be reductions. They say there is increased competition, with new entrants in the higher surplus strata – the market segment they are currently focusing on – but prices are relatively unchanged in the primary strata.
They said that problem areas in the D&O sector include coverage. for SPAC-related transactions, cryptocurrency, cannabis, the environment, IPOs and cyber risks and planning litigation over management fees, among others.
John M. Orr, Product Manager for D&O Responsibility for Willis Towers Watson PLC in San Francisco, said: "The market is much improved from just one year ago. "
" We still do not see flat renewals or reductions with regularity, but they occur more often for risks that we over-corrected in the hard market. "
Interest rates are stabilizing, says Kristin Kraeger, Boston-based CEO of Aon PLC. "We did not necessarily see an expansion of coverage, but we did see that conditions remain consistent," she said.
In some cases, there will be interest rate cuts, "especially as the year progresses," said Priya Cherian Huskins, San Francisco-based partner and senior vice president at brokerage Woodruff Sawyer & Co.
"There is more market differentiation now than there has been before," said Brian Dunphy, senior vice president and chief executive officer of Alliant Insurance Services Inc. in New York.
"Entrepreneurs look at selected accounts as really good opportunities and write them closer to flat, or flatter, than previous years. ", he said, adding that although some accounts are still viewed with a" more yellow eye ", they are not increasing as much as before.
Matthew McLellan, Washington DC-based senior vice president and D & O product manager for Marsh LLC, said he saw "much more appetite for new business" by the end of 2021
Over the next six months, unless the omicron variant disrupts the economy, "we should see more of the new stabilization, says Andrew Doherty, New York-based national chief and professional risk solutions leader for USI Insurance Services LLC.
"I hope things stay stable," said James Rizzo, New York-based guarantor for US executive risk on Beazley PLC. He added, however, that the D&O market operates in an environment of higher demands, with a variety of dangers and inflation and defense costs.
Derek Lakin, New York-based senior vice president and national SPAC practice leader for Lockton Cos. Inc., said that traditional older insurance companies "have had two to three renewal cycles to get their premiums" to a sustainable level.
"We have basically knocked on the door to equilibrium, unless there is another big surprise" in in the form of a macro-event, such as a financial crisis, significant SPAC-related litigation, or an event-driven issue such as a new COVID-19 variant, he said. Inc., said industries directly affected by the pandemic, including hospitality, entertainment and food, "still have challenging innovations."
Nora Hattauer, New York-based chief financial officer at Ameri can International Group Inc., said in a statement that AIG last year increased its exclusion of antitrust protection to all private and non-profit entities, where historically full unit coverage had been available. "In some cases, coverage will still be available on an under-limited basis, and this could become more of a trend as regulatory audits increase," she said. In New York. The primary layer "still slowly picks up a small positive velocity, and the lower excess stabilizes and flattens. We begin to see hints of potential softening and perhaps even some deceleration."
"When you move up the tower to the medium and high surplus layers, it's normal where the new capacity plays, so you have competition out there "that creates price pressure, said Mr. Edwards.
The new entrants "pick their seats, choose to be most active in high connectivity and avoid certain sectors," said Kevin LaCroix, vice president of Beachwood, Ohio, for RT ProExec, a division of RT Specialty LLC. He said more participants are expected.
Bill Dixon, Edison, New Jersey-based Amwins Group Inc. Group Executive Vice President and Group Practice Leader professional lines, said: "Some of the new capabilities have now reached a maturity level where they may become more aggressive "and is in a position to consider entering the primary markets, where they may drive down pricing" slightly ", he said.