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The D&O market sees increased capacity



The management responsibility market faces significant challenges related to the COVID-19 pandemic but will benefit from the increased capacity in the market, says a broker.

Even before the pandemic, the industry faced several challenges, including an increase in lawsuits and expected increases in premiums and retentions, says Christine Williams, New York-based CEO, financial services group, at Aon PLC.

She spoke at the Minneapolis-based Professional Liability Underwriting Society annual directors' symposium, which was held at a distance last week.

"We started 2020 with a set of challenges" that were reinforced with the impact of COVID-19 starting in March, Williams said.

Meanwhile, there has been an increase in activity related to special purpose companies or SPAC, which has led to about 40 related lawsuits, she said.

There may also be claims for employment responsibilities related to occupational safety, reductions in force, people working remotely and returning employees to the workplace, she said.

Lawsuits have also been filed in connection with alleged excessive management fees and an increase in ransomware. And while the number of securities class actions declined slightly last year, they remained at high levels, Williams said.

Four months to 2021

, "we continue to see portfolio adjustments overall outside the gate," and prices have continued to experience pressure, she said.

However, there have been a dozen new players in the management responsibility market in the United States and London, Williams said. "It's early days, but I think they will be able to provide enough capacity," she said.

Ms. Williams also referred to the personnel movement in the industry. "I do not remember where we saw so much movement" both among brokers and insurance companies, she said. "This will certainly lead to competition," she said.

John Doyle, President and CEO of Marsh LLC, said during a separate session that he saw signs that D&O prices were declining during the first quarter, which is likely

Capital is moving faster than at any time in his career , he said, "and it will look for profits, so things tend to level out pretty quickly."

During a session on new market players, it was discussed why so many are in London or Bermuda rather than the United States.

In the UK, units have the ability to speed up and freedom in pace and form, while in the US new markets are forced to go through different states, involving many layers "and there is a lot of work to be done to make the company ready to go ", says Jack Kuhn, CEO, Insurance, at Vantage Risk Ltd. in Berkeley Heights, New Jersey, whose parent company is Bermuda-based.

The anoth session focused on liability insurance, which provides coverage for security class measures that survive proposed redundancies. "This type of product even helps the game plan," said Paul R. Bessette, co-chair of King & Spalding LLP's corporate and securities litigation practice in Austin, Texas.

During a session on international D&O insurance, Chris Warrior, London-based UK Commercial Management Manager for Berkshire Hathaway Specialty Insurance Co., said the market was at a crossroads, with London insurance companies boosting appetite to provide new capacity . Catalog

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