Broker Check

Directors & Officers Liability - Higher Prices, Less Covverage

January 05, 2021

The market for Directors & Officers (D&O) Liability hardened significantly in 2020, and this will continue in 2021. Marsh LLC reported  price increases of over 50% in the fourth quarter, and rate increases for over 90% of its policyholders.

A post by Steve Hallo in Property Casualty 360 lists five trends Marsh sees for D&0 insurance:

  1. Less market capacity especially for life science, tech and newly public firms.
  2. More securities lawsuits and derivative suits against individual directors and officers. "Side A" coverage for individuals is becoming more expensive (additional limits can and should be purchased).
  3. Environmental, social and governance (ESG) issues at public companies are targets of activists, and coverage may be limited.
  4. Diversity of boards will be an issue.
  5. Mergers and acquisitions will increase in pricing.

It remains to be seen if these trends will affect smaller private companies as much as larger ones. In addition to price increases, check renewal policies for coverage changes. At Beacon we will review your renewals and try to limit any new restrictions.