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 significant rate reductions throughout 2023 and early 2024, median rates are no longer dropping as drastically as they have over the last 3 years which is in line with our expectations given the significant reductions that have already taken place.
Nonetheless, our initial data for H1 2024 indicates 72% of our clients that renewed in Q2 saw their primary rates decrease or remain flat (further detail can be found in chart 6 in Appendix I). In excess layers, 82% of our clients received decreases or their rates remained flat. Overall, the median rates continue to trend down, which we attribute to continued competition between insurers. We have seen various situations where insurers have declined certain accounts either because rates have become too low or simply because some risks are outside their appetite. However, it is usually possible to replace those insurers with other insurers, meaning that rate reductions remain common, although some countries remain more challenging to find capacity for. While new entrants have been minimal over the last year, there has been a meaningful new entrant who had a broad appetite, experienced underwriters and looking to be commercial where possible which has contribute to the pressure on incumbent markets.
We are also seeing increased interest in long term agreements (“LTAs”) from some of our clients and some underwriters. This could be a sign of the level of competition in the market so insurers are making attractive offers to lock the business in and prevent re-marketing but may also be an indication that some insureds want to lock in soft market rates while they can.
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].
The number of notifications continues to drop following the peaks between 2017 and 2020 (see chart 2 below).
Looking forward, we expect rates to continue to flatten in the second half of the year.
Source: Data from WTW FINEX FINMAR client placements, sourced as 8 July 2024, see Appendix II for further information
Whole Tower median rate on line has stabilised to some extent but it continues to show an overall continuing trend down. For those clients who saw decreases, the mean decrease was 18%. See Chart 1 above.
Primary layer rate on line figures are in a similar position to the Whole Tower. For those clients who saw decreases, the mean decrease was 15%. See Chart 4 in Appendix I.
While 2023 saw a small uptick in notifications when compared to 2022, it was still lower than 2015-2021 numbers. Based on the way 2024 has started, if annualised, the number of notifications in 2024 may end up at the lowest level in the last decade. However, we would caution that this could easily change as the year progresses.
Source: WTW client notifications from GB placements only, between 1 January 2007 to 10 July 2024.
Our biggest Directors’ and Officers’ Survey Report to date (in collaboration with international law firm, Clyde & Co LLP) has been 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 by clicking the link.
If you have any topics you would like to be covered in our next survey, please get in touch.
Source: Data from WTW FINEX FINMAR client placements, sourced as 8 July 2024, see Appendix II for further information
Source: Data from WTW FINEX FINMAR client placements, sourced as 8 July 2024, see Appendix II for further information
Source: Data from WTW FINEX FINMAR client placements, sourced as 8 July 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).
