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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.

LCPA: 20/629

“Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.”