TheCorporateCounsel.net

According to Woodruff Sawyer’s recent report the D&O insurance market remains buyer friendly, but perhaps not quite to the extent that it has been in recent years. The report notes that D&O insurance premiums peaked in Q1 2021 at 4.7x Q1 2018 levels. In 2022, the market turned dramatically as new entrants drove pricing down, and by Q2 2024, premiums had dropped to 1.9x 2018 levels. This excerpt says that this downward trend in premiums is expected to continue in 2025, but companies may need to change carriers in order to realize additional savings:

Although we’re still in a soft D&O market, the rate of decline in premiums for both newly public and mature companies has decelerated and will likely continue to do so in 2025. Underwriter sentiment predicted the hard market in 2021; their response to whether rates will continue to go down today and moving forward should not be ignored. Over the last three years, fewer and fewer underwriters have predicted premiums would go down (40% in 2022, 30% in 2023, and 21% today).

Our own forecast is that all public companies will continue to have an option for D&O program cost savings—but more likely from new market entrants than their incumbent insurance carriers. Established carriers will work hard to keep rates at what they deem reasonable to avoid the dynamic of underpricing today only to then be forced into hard market pricing or leaving the D&O market altogether. In 2025, we’ll continue to see new carriers take more risk to build market share while established carriers will carefully defend their turf, all while keeping a watchful eye on claims trends.

There’s more good news – Woodruff Sawyer also says that most D&O buyers were able to renew policies in 2024 with flat or lower self-insured retentions, and that this trend is expected to hold for 2025 as well.

– John Jenkins