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D&O market more competitive for buyers: Panelists



SAN DIEGO — Buyers are seeing more competitive market conditions for board and executive responsibilities, driven by increased capacity and reduced demand due to a slowdown in IPO activity, several panelists said Thursday at the Professional Liability Underwriting Society’s 35th annual conference.

The industry is in a pretty good place in terms of interest rate adequacy, said Marek Krowka, chief underwriting officer, North America Financial lines, at American International Group Inc.

But rate adequacy is more stable in the primary market than in the surplus market, where there has been a lot of new capacity and competition, Mr. Krowka. “It causes some concerns about the interest rate on surplus business,”

; he said.

Over the past three years, the interest rate change in the market has been dramatic, and the point of interest rate adequacy was probably met, said Jonathan Reiner, vice president at Ryan Specialty LLC.

“It leads us to believe that it was a bit of an overcorrection, judging by how much price is given back to customers afterwards,” Reiner said.

If it continues in this direction, the market could reach the point of “overcorrecting in the wrong direction,” he said.

Deals flowing through the wholesale market tend to see more dramatic rate impact compared to a traditional retail portfolio, and the IPO SPAC business has seen some of the most significant rate reductions, Reiner said.

Capacity is not the main factor driving the recent reductions, said Yera Patel, director of claims and finance for Inigo Ltd., a London-based specialty insurance and reinsurance company.

“The IPO market and the stock market have dried up. That’s really the most important factor,” Patel said.

Another factor is that long-established markets that had pulled back capacity decided to sit back and take capacity, she said.

Buyers set their budgets in July and August for the entire year, so it’s important to have transparency with insurers, says Beth Goldberg, vice president and chief risk officer at Northwell Health, a health care network based in Great Neck, New York.

“Make sure when you sign that you’re not spreading the rate like peanut butter,” Goldberg said.

Buyers want to be valued, she said. “Your clients have budgets, so you have to be very transparent in what you say when you come to the table,” she said.

With new market players, trust is important, she said. “I want to see that they have their whole strategy defined because I don’t want to see flip-flopping,” she said.

The “Fact or Fiction of the D&O Market” panel was moderated by Gregory Spore, Managing Director and Center of Excellence Leader at Guy Carpenter & Co LLC.


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