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Home / Insurance / D&O premium tops since 2014, but COVID claims can lag behind: AM Best

D&O premium tops since 2014, but COVID claims can lag behind: AM Best



Last year was the best year for insurers’ premiums, volume and direct profitability for board members and salaried employees since 2014, with insurance companies striving for moderate to significant price increases that favored sales growth, says a report issued by AM Best Co. on the Monday.

But issues including any lagging behind COVID-19-related D&O claims remain, the report said.

Price increases during each quarter were more than 10% and are expected to remain at or near double digits this year, according to the report “D&O Insurance: Positive 2021 Results, but the Segment Still Faces Formidable Challenges.”

“Monetary and fiscal measures helped mitigate some of the effects of covid-1

9 on both individuals and businesses, and delays in court proceedings hindered the normal insurance claims cycle programs,” the report said.

As covid-19-related D&O claims may lag, “the increase in the premium and its impact on the line’s direct profitability may not reflect the actual depth and complexity of the challenges that D&O insurance companies still face,” the report says.

Other formidable challenges facing the D&O market include social inflation, which has led to more plaintiff-friendly legal decisions and greater jury awards; cyber and ransomware attacks; the growth of disputes for specialty company acquisitions, which has increased the cost of D&O insurance; and regulators’ focus on environmental, social and governance factors.

The D&O market is also very concentrated, with the three largest D&O writers – Axa XL, a division of Axa SA; Chubb Ltd .; and American International Group Inc. – account for about a third of the market, according to the report.


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