A highly competitive market pricing environment along with a shifting claims landscape is having an adverse effect for many professional liability underwriters, particularly in Directors & Officers (D&O) liability insurance.
Though representing only 1% of total industry direct premiums, D&O insurance comes with a notoriety that belies its size. Sizeable D&O claims arise from events such as corporate insolvencies, large stock price declines, financial reporting irregularities or regulatory investigations. D&O insurance is intended to cover the directors and officers of an organization against allegations of negligence, misleading statements or wrongful acts that lead to litigation. Leading underwriters in the D&O insurance segment include AIG, Chubb Limited and XL Group Ltd.
D&O specific direct underwriting results are reported by insurers in statutory supplemental filings since 2011. Following initial years of steady growth, unyielding market competition has stalled premium growth over the last four consecutive years. Industry direct written premium volume held at approximately $6.4 billion in 2017.
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