TheCorporateCounsel.net

Woodruff Sawyer recently published its annual D&O Market Update, which discusses the roller coaster ride that public companies have experienced when it comes to D&O insurance premiums over the past few years. The report notes that during the second half of 2021, 71% of public companies renewing the same year-over-year program experienced a price increase, while just a year later, 87% of public companies achieved a decrease in the cost of their renewal program.

Favorable market trends accelerated into the first half of 2023, and this excerpt suggests that in the short term at least, those favorable pricing trends will continue:

As we move into the second half of 2023 and look ahead to 2024 and beyond, 63% of underwriters predict that D&O rates will stay the same, with another 30% expecting that rates will continue to fall. Our own forecast is that public companies will continue to see savings—but on a more moderate basis—compared to the sizeable savings achieved in the second half of 2022 and so far in 2023.

The publication provides some color on the reasons for the significant price increases that D&O insurance buyers experienced during 2021 and the first half of 2022, and cautions that some underwriters are concerned that continued price decreases may lead to a “whipsaw” effect on premiums in a few years.

– John Jenkins