The U.S. Directors & Officers (D&O) insurance line has experienced some of the most pronounced pricing increases over the last three years among all commercial lines, with shifts in underwriting practices such as lower limits, higher retentions and more coverage exclusions fostering improvement in financial performance, Fitch Ratings says.
However, these trends are subsiding, leading to a reduction in both rate momentum and premium volume in 2022. Expansion of underwriting capacity from recent entrants and potential claims volatility from multiple sources reduce the likelihood that current underwriting gains will last.
D&O segment performance continued to improve in 1H22, with the direct loss ratio falling to 53.4% versus 54.7% for full-year 2021, according to industry aggregate statutory supplement data. This figure corresponds with an estimated mid to high 90% range direct combined ratio. Earned premium growth of 22% versus 1H21 and relatively stable loss experience contributed to this improvement. Read more.
