D&O insurance pricing begins to ease

Pricing for directors and officers (D&O) insurance was down in Q2 2022, according to the latest Market dynamics outlook report from broker Aon.

The broker explained that rates for D&O decreased in Q2, albeit at a slower pace than they had increased during the preceding, pandemic influenced hard market cycle.

The broker explained that price reductions had been stimulated by “increased competition, both in terms of new capacity from insurers and MGAs and a broadening of appetite from existing insurers, many of whom had reduced or completely withdrawn capacity during the pandemic”.

Despite a fall in pricing, Aon said that overall market conditions for D&O cover were “moderate” overall.

Pricing was not the only positive for D&O market conditions, however – Aon also noted that insurer capacity was “abundant” for the business line.

Capacity was available for the majority of commercial sectors across Q2, with more limited capacity available on primary placement compared to excess layers where more abundant capacity was available.

Open to conversations

Aon also classified underwriting across D&O lines as flexible, noting that post-pandemic strategy adjustments – combined with market competition – led to improvements in insurer flexibility.

However, the broker noted that territory and sanctions-related exclusions remained points of discussion for D&O cover providers, driven by geopolitical events in Ukraine and Eastern Europe.

Coverages had also broadened for D&O cover, with increased competition among providers leading to insurers being more open to coverage discussions.

Overall, Aon predicted that increased competition between insurers was expected to lead to a more favourable pricing and underwriting environment for insureds in the future.