Introduction

After several years of elevated pricing, the D&O marketplace continues to stabilize and Q1 2022 finished with overall declining rates. More importantly, this trend continued in Q2 2022, likely signaling an end to the 2020-2021 hard market. According to an AON Quarterly D&O Pricing Index report, the average price per million of coverage for AON clients renewing in Q2, 2022 declined by 6.5 percent. For primary layer policies renewing with the same terms and conditions, 25 percent experienced a price decrease of 11.5 percent, 38 percent renewed "flat", and the remainder experienced a 9.4 percent increase.

America isn't alone in this trend. D&O pricing in the UK, Australia and other major economies are down as well. Marsh reports that D&O rates in the Australia-Pacific market decreased 5 percent in Q2 2022, the first time since 2017. Similarly, United Kingdom companies with US securities exposures experienced rate decreases of 5 percent in Q1 2022 and 8 percent in Q2 2022.

These decreases are primarily due to a considerable number of new markets, including more carriers offering primary placements, heightened competition for excess and Side-A coverages, and improved insurance company loss ratios.