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Risk in Context

London D&O and Crime Market Insurance Update

20 November 2019

The transitioning of the insurance market is affecting companies in a number of areas. Management liability insurance, and more specifically directors and officers liability and crime, is proving particularly challenging. 

Directors and Officers Liability (D&O)

London market conditions have deteriorated markedly since the start of 2019, having already started firming up in the third and fourth quarters of 2018. In the first half of 2018, D&O market challenges were largely limited to US, Canadian, and Australian-listed accounts and with companies with meaningful claims activity. However, these challenges have since spread to the wider non-US-listed commercial D&O market.

Trends we are seeing include:

  • A market-wide deterioration in claims developments on prior years of account, which is causing concern regarding the size of tail exposures of past years. Claims and notified matters dating back as far as 2012 and 2013 have continued to develop negatively for the market.
  • The vast majority of London market insurers seeking to increase D&O rates across their books, in addition to managing their line sizes and capacity deployment generally downwards, subject to risk profile.
  • Continuing pressure to increase levels of self-insured retentions (deductibles).
  • The trading environment has deteriorated further, with traditional excess layer insurers now going through reserve-strengthening exercises and rating model overhauls.
  • One large insurer closed its London management liability book (both existing and new business) in September 2019, causing significant concern around the market as to the relative condition of competitor books. Further insurer reviews are anticipated across the market and additional book closures during 2020 cannot be ruled out.


Crime market conditions have further deteriorated across all sectors and company types during 2019. Commercial crime rates continue to increase due to claims activity. While most losses suffered by insureds still relate to traditional employee theft, cyber-crime and social engineering fraud (SEF) have become the methods of choice for fraudsters seeking personal gain.

Trends we are seeing include:

  • Some traditional crime insurers withdrawing from writing this class of business on terms commensurate to the exposures, or choosing to quote with sub-limits or coverage restrictions.
  • Insurers that still wishing to compete and/or negotiate on coverage tending to carefully judge deductible levels and/or electing to co-insure on a primary-limit basis.
  • Some insurers choosing to add manuscript endorsements onto policy forms, which can restrict cover – for example, co-insurance for social engineering fraud.
  • Insurers requesting more detailed underwriting information – for example, additional proposal forms regarding vendor controls and accounts processes – which some companies have found burdensome and difficult to complete accurately.
  • Companies considering reducing the total limit they purchase if premium cost is prohibitive.

In conclusion, the outlook remains extremely challenging, with increasing volatility and unpredictability common. Market pricing is becoming more fragmented as insurers struggle with price adequacy and an ever-greater number of internal challenges. As we look towards 2020, there is growing concern that an abrupt market-wide adjustment is becoming more likely, as insurers seek to contain growing losses on past trading years.

Helen McGee

Senior Vice President, Private Equity and M&A Practice