Directors and Officers Liability (D&O) Insurance Market Recap 2020
Unprecedented increase in average D&O insurance cost of over 200%
Marsh Australia’s latest D&O market update has seen organisations navigating through their toughest renewals and unprecedented rate increases and other changes across the D&O market over the last 12 months.
Some ASX200 companies have seen average D&O insurance cost increases in excess of 200% and deductibles climbing as high as $250 million on their renewals.
Private companies and NPOs also impacted
Premium and retention increases and reduction in capacity have not been limited to publicly listed companies. The impact of securities class action claims have rippled through all D&O policies and management liability package policies commonly purchased by small to medium-sized businesses and not-for-profit organisations (NPOs). Current market conditions have been particularly harsh for NPOs, many of which are experiencing a surge in demand for their services during the COVID-19 pandemic.
Lower limits, larger retentions, narrower scope of cover
With unprecedented rises in D&O premiums, some of the key trends observed throughout 2020 include:
- Removal of Side C cover (Securities Entity Cover)
- Removal of Side B Cover (Company Reimbursement Cover)
- Purchasing Side A Cover only (Protection for individuals where they are not granted an indemnity from the company)
- Very large increases in retentions (deductibles)
- Buying significantly lower limits than previous year
- Restrictions in coverage (e.g. new exclusions)
- Non-traditional ways to protect directors and officers such as the use of Protected Cell Captives
For more insights on the D&O market’s capacity, appetite, trends and developments, download our full report.
NOTE: This D&O report is a part of the 2020 Australian Insurance Market Recap Series – a series of local market insights by insurance class, with a specific focus on the state of market in Australia. Other insurance classes featured in the series include: