Dealing with a split D&O market

Rising premium for directors’ and officers’ (D&O) liability insurance in 2020 and 2021 has attracted new players to the market, which are now competing against the established D&O insurance providers.

The background

It took D&O insurers quite some time and effort to bring the market to a level that looked rate adequate, and therefore attractive for new entrants. Previously the D&O market had experienced a prolonged period of fierce price competition, expanding policy forms and insurers deploying huge amounts of capacity for D&O risks and at highly competitive premiums. To correct their portfolios and right size limits and premiums, insurers deployed reduced capacity and even declined to renew clients in challenging industries, or those who were not sufficiently financially resilient. This approach has resulted in sharp premium increases in 2020 and 2021, multiplying on some of the more challenging risks, including businesses ravaged by the effect of Covid-19 and successive lockdowns.

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 in this volatile time, with each placement becoming about problem management, scrambling to fill gaps in programmes and mitigate exclusions and subjectivities. The D&O market has now stabilised and established players are now pushing for “no premium reductions” at renewal, at least not on primary layers.

New entrants

Rate improvements attracted new players with aggressive premium growth targets to the D&O market in 2021 including SCOR, Convex, IQUW, Inigo, Rising Edge, Tegron.

These insurers are now competing with established players for market share before rates soften again. Insurers are courting brokers with their newly broadened appetite and larger line sizes looking to get onto programmes, often by dislodging incumbents.

Juggling priorities

For brokers and clients, renewals are no longer about problem management but about balancing long standing relationships, often cross class, whilst at the same time encouraging competition from new entrants many of whom are monoline D&O or financial lines only.

Primary renewal premiums are largely flat, with increased limit factors reducing on excess layers producing savings on multi-layered programmes. To become more “sticky” and relevant to their clients, some insurers are quoting more primaries and also quoting for the ancillary lines such as Crime, Pension Trustee Liability and Employment Practices Liability.

A number of these markets, including Berkshire Hathaway, Beazley and Allied World have strengthened their locally admitted policy capability to attract more primary business and challenge the more established primary insurers such as AIG, Chubb, Zurich and Allianz (AGCS).

To confuse things further, the change of personnel around the D&O market has reached unprecedented proportions, as underwriters jump to new capacity providers, rather than endure the corrective phase of legacy underwriting portfolios. 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 a number of 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? 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 levels of capacity available for large D&O programmes before 2019 with some exceptions for challenging industry sectors such as travel, retail, hospitality, real estate, 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) especially funded to add capacity to those risks who have achieved the highest ESG accreditation.

To secure the most favourable outcomes and attract sufficient capacity to complete D&O programmes, policyholders should pay particular attention to certain areas of risk. Insurers will be asking specific questions around financial resilience and Covid impact, diversity and inclusion, ESG and CSR, cyber network security, employment practices and similar emerging areas of directors’ risk. In preparing well for these questions, policyholders will attract the maximum number of insurers, driving some competitive tension to achieve premium savings on large programmes.

General trends in D&O insurance

  • Intrusive underwriting processes with more concentration on financial resilience and Covid impact

  • Greater number of insurers willing to quote primary

  • Premiums largely flat and even some savings, especially in excess layers

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

  • Incumbents often unwilling to provide premium reduction but will readily undercut on new business

For further information, please contact:

Michael Lea , Head of Management Liability

T +44 (0)20 7933 2669