D&O premium volume remains flat: Fitch

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Directors and officers liability insurance premium volume was flat in 2017 at $6.4 billion, remaining virtually unchanged for the fourth consecutive year, while underwriting results deteriorated, said Fitch Ratings, in a report issued Thursday.

The special report by New York-based Fitch said the flat premium growth over the past four years contrasts with the steady growth during 2011-2014. “These premium trends reflect strong market competition in D&O and abundant underwriting capacity in U.S. casualty and professional lines overall,” says the report.

Meanwhile, the report said D&O insurers reported a significant weakening in direct underwriting results, with the industry in the aggregate posting a 77% direct incurred loss and defense and cost containment ratio, which represents the worst reported results since D&O supplemental data was first recorded in 2011.

The report says there are several emerging risks that are a concern for future D&O losses, including cyber risk and employment practices. “Risks of greater personal liability for an organization’s senior management and directors from various exposures are likely to spur future coverage demand,” the report says.

The report says rankings of top D&O underwriters remain relatively unchanged, with the top three remaining American International Group Inc., accounting for 14.3% of industry direct premiums, followed by Chubb Ltd. at 12.2% and XL Group Ltd. at 10.3%.

Oldwick, New Jersey-based A.M. Best Co. also said in a report earlier this month that D&O claims trends worsened last year, but the pricing environment “has yet to catch up.”

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