RISING D&O CLAIMS OUTPACE RATE INCREASES, SAYS AM BEST

Prices for directors and officers insurance will continue to rise in 2020, as rate increases have failed to keep up with the deterioration in claims trends, according to AM Best. Shareholder law suits have reached all-time highs while settlement amounts and defense costs have increased significantly. Social inflation has also led to increased numbers of claims while the number of D&O claims related to cyber incidents, cannabis and #MeToo is growing, AM Best said in a report. “The D&O market could resemble the closest thing to a traditional hard market in the p/c industry in some time, although with capacity still readily available, the market is not hard. The difficulty of generating profitable results will continue to test insurers over the near to moderate term, a reflection of just how long D&O risks have been underpriced and of the simultaneous increase in the types of legal threats directors and officers face. These escalating risks are outside the spectrum of the prevailing base rate structure,” according to the ratings agent.