From: Captive.com/IRMI
A.M. Best has assigned a negative outlook for the US directors and officers (D&O) market segment, attributing the trend to heightened competition leading to increased capacity and reduced pricing. The agency also said that escalating legal costs, alongside expanding risks associated with new technologies and regulatory pressures concerning environmental, social, and governance factors, are further complicating the landscape for D&O insurers.
Elizabeth Blamble, a senior financial analyst at A.M. Best, said, “The current pricing environment may prove unsustainable based on developing losses and how those losses affect company underwriting results prospectively.”
According to a separate A.M. Best report titled US D&O: Return to Normalcy in Results, Demand, and Pricing, premium in the D&O segment has declined by nearly 20 percent from its peak of $14.9 billion in 2021. Factors such as decreased demand for transactional coverage and initial public offerings, as well as pricing trends, are contributing to this decline. A.M. Best projects that premium for the full year of 2023 will amount to $12 billion. Notably, the direct loss ratio through the third quarter of 2023 stands at 51.5, marking the lowest figure in 9 years.