September 22, 2022

D&O Insurance: Premium Trends

Woodruff Sawyer recently published their D&O Market Update, and like other commentators, Woodruff Sawyer expresses a pretty optimistic view on D&O insurance premium trends. This excerpt discusses the changes in the market that occurred during the first half of this year:

During 1H 2022, pricing trends flipped from where they were in 2H 2021. This shift is most dramatic for those business sectors where Woodruff Sawyer’s clients happen to be most heavily weighted: life science, technology, and IPOs. These industry segments were hit hardest by the hard market and consequently are gaining the most benefit from the current, more competitive market. More mature companies or those in less risky industries are also benefiting from the improving market, but the scale of the percentage decreases through the rest of this year and into 2023 will be somewhat more muted.

As always, clients beset by tricky litigation, or litigation precursors such as large stock drops after releasing bad news, may still see increases. Comparing data from 2H 2021 with 1H 2022 is telling. According to Woodruff Sawyer’s data, 70% of clients renewing between July and December of 2021 received an increase. Starting in January of 2022, the trend flipped: 16% of clients experienced an increase, 15% obtained a flat renewal, and 69% obtained a decrease.

The report says that another contributing factor to the improved premium environment is competition provided by new entrants to the public company D&O insurance market. These folks were enticed to jump into the market by the rising premium environment of 2020 & 2021. Now, they’re helping to hold the line on premium increases.

John Jenkins