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Financial Lines Update 2023: A Brighter Horizon for Management Liability Insurance

The Directors & Officers (D&O)/Management Liability insurance market faced a turbulent phase between 2018 and 2021, often described as a 'perfect storm'. This turbulence was primarily due to a surge in US class actions, rising defense costs and heightened regulatory oversight, especially in the private business sector. Additionally, the market was destabilised because D&O insurance was historically underpriced and not thoroughly underwritten.

Many businesses were taken aback by the sudden spike in premiums and the restrictions on coverage. But here's the good news: the storm has passed and the market is bouncing back faster than anticipated. This isn't the first time we've seen such a recovery. A similar scenario unfolded in 2001/2. The swift comeback can be attributed to new players in the market seizing growth opportunities.

What does this mean for businesses?

Reduced Premiums: European and US-based companies have witnessed a whopping 66% reduction in premiums in just one renewal cycle. UK-based firms can also expect reductions, potentially up to 20%.

Strategic Engagement: To maximise these benefits, companies should actively engage with the insurance market. It's crucial to highlight your company's unique strengths and metrics in the market pathfinder document provided by your broker.

Prioritise Key Benefits: As the trading environment evolves, focus on:

  • Limit Escalation

  • Premium Reduction

  • Coverage Improvement

In essence, it's a time of positive change for the D&O/Management Liability Insurance market. Embrace the shift and let's navigate this journey together.


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