Nasdaq Inc.-listed companies reported a 20.3% drop in directors’ and officers’ liability premiums for their first $5 million of coverage for 2022, a brokerage report published Wednesday said.
The survey of 350 public companies by BRP Group Inc., the parent company of broker Baldwin Risk Partners LLC, conducted in partnership with Nasdaq, found that when the additional easing of excess interest rates is included, the premium reduction for the entire program fell by 35%.
The survey found that healthcare and technology in particular benefited from last year’s D&O reductions. Healthcare companies reported a 21.2% decrease, while those with IPOs in the past three years reported a 25.8% decrease and non-recent IPOs had a 14.5% increase.
Technology companies reported a 30.3% decline, recent IPOs reported a 36.7% decline, and non-recent IPOs a 12% decline.
The survey found that companies paid significantly more premium when they had an initial public offering or a deSPAC, which is when private companies go public by merging with special purpose acquirers, during the last three years.
For $5 million in primary coverage, for example, the average premium for companies with a market capitalization of up to $100 million was $264,182, while the average premium for a company with a recent IPO was $515,094, and for a deSPAC was $433,125.
There was also a significant difference in retentions, with the overall average retention for companies with up to $100 million in market capitalization $1.3 million, while it was $4.1 million for a recent IPO and $3 million for a deSPAC.
Among other survey findings, which it said could be a result of the overall increase in interest rates in recent years combined with lower company valuations, 25% of companies lowered their overall limits, while 23% raised them and it remained unchanged at 52%, according to the survey.