Press Release - APRIL 06, 2018

Best’s Special Report: Rising Claims Frequency Hampers Results in Directors’ and Officers’ Liability Insurance Sector


CONTACTS:
 Bobby Skrabal
Industry Analyst
+1 908 439 2200, ext. 5159
bobby.skrabal@ambest.com

Darian Ryan, CPA
Senior Financial Analyst
+1 908 439 2200, ext. 5449
darian.ryan@ambest.com
Christopher Sharkey
Manager, Public Relations
(908) 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
(908) 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - APRIL 06, 2018
The underwriting performance in the U.S. directors’ and officers’ (D&O) liability insurance market deteriorated significantly in 2017. Competitive pricing and an increasing number of lawsuits have hurt the line’s profitability, according to a new A.M. Best special report.

The Best’s Special Report, titled, “Quick Look: D&O 2017 Year-End Results,” states that the main driver of the worsening claims frequency trend is the increase in federal securities class action litigation, as filings in 2017 increased year over year by a reported 52%. Although the average size of settlements declined, to $18.2 million from $72.0 million in 2016, the negative effects of increased litigation will continue to outweigh the positive effects of decreasing average settlements for most insurers.

In addition, while year-over-year direct premiums written in the D&O sector remained relatively flat, the 2017 direct loss and defense and cost containment (DCC) ratio rose to 77.2 from 65.6. The 11.6 point deterioration is the largest experienced since the D&O supplement was first filed in 2011.

A.M. Best notes that some companies have been showing underwriting discipline and are seeking rate increases; however, pricing remains soft compared with claims trends, and loss and DCC ratios will remain heightened while competitors continue looking to bump up their market share.

To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=272378 .

A.M. Best is the world’s oldest and most authoritative insurance rating and information source.