This update analyses our observations of the current market conditions for Directors’ and Officers’ insurance and the impact this has on board directors, non-executive directors and insurance buyers and is based on our observations of the market with our WTW clients and not a whole of market review. For ease of understanding, the percentages have been presented as rounded figures.
After a year of significant rate reductions, 2024 started very well and is following 2023’s trend: Q1 median rate on line is currently at the lowest level since 2021. The increased competition between insurers has continued to drive market improvements and rate reductions. Increased competition is not limited to competition between insurers in the London market and, in particular, we continue to see increased competition from local markets.
Up until this date, 100% of our clients that renewed in Q1 had decreases in their primary and excess layers (further detail can be found in chart 6 in Appendix I).
Policy terms also continue to reflect the market softening with insurers increasingly willing to underwrite business on “any one claim” limits as well as other bespoke coverage solutions. Many of our clients have been able to benefit from WTW’s proprietary D&O wording, DARCstar 2023[1], and we are seeing increased interest in exploring the purchase of additional limits particularly utilising WTW’s A-Star Side A DIC facility[2].
Following a period of significant decreases in the volume of claim and circumstance notifications between 2020 to 2022, the number of notifications in 2023 was slightly higher than 2022 (see chart 2 below).
Looking forward, we expect further rate decreases in 2024 with potential for rates to flatten in the second half of the year. We are starting to see risks where some insurers are unwilling to agree to further decreases.
Source: Data from WTW FINEX FINMAR client placements, sourced as 26 March 2024, see Appendix II for further information
Whole Tower median rate on line is also at the lowest level of the last 3 years. For those clients who saw decreases in 2023, the mean decrease was 20%. See Chart 1 above.
Primary layer rate on line figures have had little variation since the end of 2023 but still remained at the lowest levels of the last 3 years. In 2023, for those clients which saw a discount, the mean discount was 16%. See Chart 4 in Appendix I.
While 2023 saw a small uptick in notifications when compared to 2022, it is still lower than 2015-2021 numbers.
Source: WTW client notifications from GB placements only, between 1 January 2007 to 31 December 2023.
Our biggest Directors’ and Officers’ Survey Report to date (in collaboration with international law firm, Clyde & Co LLP) has been recently published, with responses from more than 900 directors, officers and risk managers from over 50 countries around the world. The Report is accompanied by a series of articles delving into some of the details, including regional overviews and discussions on specific topics like ESG and insolvency.
You can find the Global Directors’ and Officers’ Survey Report 2024 and accompanying articles here.
Source: Data from WTW FINEX FINMAR client placements, sourced as 26 March 2024, see Appendix II for further information
Source: Data from WTW FINEX FINMAR client placements, sourced as 26 March 2024, see Appendix II for further information
| Min | Max | Notes | |
|---|---|---|---|
| Rate on Line | 0.01% Rate on Line | No max | Rate on Line is calculated by dividing the premium by the limit of liability that is being purchased and expressing that as a percentage. This shows the proportional cost of the limit of liability being purchased by each client. |
| Rate on Line change | 0.01% Rate on Line | No max | We are comparing the Rate on Line paid last year to the Rate on Line paid this year for a given client at renewal. |
Figures in this report are based on WTW FINEX FINMAR client placements, sourced as 26 March 2024, and WTW client notifications from GB placements only, between 1 January 2007 to 31 December 2023. They will be updated periodically to reflect additional records. Graphs in this report show the moving average between 2021 and Q1 2024.
An ABC placement is one which includes cover for Side A (D&O non-indemnified loss), Side B (D&O indemnified loss) and Side C (Company Securities Claims).
