Market conditions improve for D&O insurance buyers

The directors’ and officers’ (D&O) liability insurance market has experienced challenging conditions in recent years, but the environment has been improving throughout 2022 and this trend is expected to continue into 2023.

The background

It has taken D&O insurers a few years to bring rates to a level that they deem to be adequate in relation to claims costs, and therefore attractive for new entrants to the market who are unencumbered by legacy claims. Prior to 2019 there was a prolonged period of fierce price competition with expanding policy forms (often broker authored), and insurers deploying huge amounts of capacity for D&O risks at highly competitive premiums. In 2020 and 2021 we saw significant premium increases, with insurers deploying reduced capacity and even declining to renew clients in challenging industries or those who were not sufficiently financially resilient. As part of the remediation of loss-making portfolios, front line underwriters’ authority was eroded to the point where most decisions on large renewals were referred to underwriting management. Brokers were struggling to provide visibility to clients in this volatile time, with each placement becoming about problem management, scrambling to fill gaps in programmes, and mitigating exclusions and subjectivities.

The D&O market has since stabilised, and although the underlying claims exposures have not changed, we have seen a return to competitive D&O market conditions. This softening of D&O market conditions has happened much more quickly than most commentators envisaged and is spurred by increased market capacity with the return of insurer new business premium targets and lack of initial public offering (IPO) activity in the capital markets.

New entrants

Increased D&O premiums attracted new players with aggressive premium growth targets to the D&O market. These insurers are now competing with established players for market share before premium rates fall below rate adequacy, offering broader risk appetite and larger line sizes to get onto programmes, often by dislodging incumbents. This competition has become more intense more quickly than most people anticipated and has resulted in opportunities for significant savings on renewals, especially on multi- layered programmes.

Market dynamics

For brokers and clients, renewals are less often about problem management, and more frequently about balancing long-standing relationships, often cross class, whilst at the same time harnessing competition from new entrants, many of whom are monoline D&O or financial lines only. Primary renewal premiums are largely flat to modestly reduced, with increased limit factors reducing on excess layers - producing larger savings on multi-layered programmes. To become “stickier” and more relevant to their clients, some insurers are quoting more primaries and quoting for the ancillary lines such as Crime, Pension Trustee Liability and Employment Practices Liability Insurance. A number of these markets, including Berkshire Hathaway, Aviva, Beazley, and Allied World, have strengthened their multinational programme capability to attract more primary business and challenge the more established primary insurers such as AIG, Chubb, Zurich, and Allianz (AGCS). To add to this, the change of underwriting personnel around the D&O market has reached unprecedented proportions, as underwriters jump to new capacity providers. The result is that some are competing for clients from their former employers and with whom they have established working relationships.

Clients will need to decide what their priorities are when faced with several competing options for their business. Are potential premium savings the number one goal, or do they wish for more stability with their established partner insurers? There may be more opportunities to negotiate coverage improvements where restrictions were imposed over the last two years. Last but certainly not least, continuity is an important consideration for D&O insurance, but at what price? It is important that a clear strategy is agreed prior to commencing the renewal process, so that the optimal outcome can be achieved.


The London market is almost back to the same capacity levels available for large D&O programmes before 2019, with some exceptions for challenging industry sectors such as travel, retail, hospitality, real estate, and care homes. Additionally, many of the insurers’ business plans now contain restrictions for less environment, social and governance (ESG) friendly industry sectors and clients. Lloyd’s has seen the launch of the first ESG syndicate (Beazley) specially funded to add capacity to those risks who have achieved the highest ESG accreditations.

To secure the most favourable outcomes and attract sufficient capacity to complete D&O programmes, policyholders should work with their brokers to identify which areas of risk should be focussed upon – often this will include some or all of the following: financial resilience; diversity and inclusion; ESG and corporate, social responsibility (CSR); cyber network security; sanctions compliance; employment practices; and the inflationary costs environment eroding margins. In preparing well for questioning in these areas, policyholders will attract the maximum number of insurers, driving some competitive tension to maximise premium savings on renewal programmes.

General trends in D&O insurance

  • Greater number of insurers willing to quote primary

  • Premiums largely reducing, especially in excess layers

  • Larger line sizes with most insurers returning to £10m as their maximum deployed capacity up from £5m

  • Incumbents agreeing premium reductions to maintain their positions and offer competitive terms for new business

  • The global economic environment will impact some clients more than others, and this is likely to be reflected in the availability of D&O capacity for them

  • The overall renewal outcome for each client will depend mainly on the business’ financial strength, the sector and geographical spread