OLDWICK, N.J.--(BUSINESS WIRE)--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.
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