Directors’ & Officers’ Liability Insurance: Is the Market Softening?

When commenting at the beginning of 2022, we expected the UK Directors’ & Officers’ (D&O) market to soften throughout the year. This has definitely proved to be the case.

The change in insurer sentiment and the increase in available capacity was marked, providing insureds with the ability to market their programmes and re-balance some of the premium increases applied as the D&O market reached its peak. Any over-priced or excess layers with inverted pricing could be replaced, driving meaningful savings.

Despite the overall softening, insurers do still have some concerns around those UK sectors most impacted by the pandemic. Proactive early insurer engagement is key for companies in these sectors, as it provides sufficient time to address insurers’ concerns and structure reasonably priced renewals.

Do we expect that this softening of the market will continue?

The rapid softening in 2022 was driven by an increase in market capacity with insurers looking to capitalise on the rating environment and a relaxing of their underwriting criteria given that the pandemic related ‘armageddon’ moment didn’t happen (or hasn’t yet happened). During Q1 2023 we expect the current levels of competition to continue with ongoing premium reductions. However, beyond that insurers should have re-set their somewhat over-optimistic growth forecasts.

Looking more broadly at the multiple headwinds that we are facing, it would seem incongruous for the D&O market to continue to soften:- 

Considering all of the above, we are expecting D&O rates to stabilise as we move through 2023, with an expected premium rate range of flat to less 10%.