4 Traits of Insurers Who Are in It for the Long Haul
The commercial D&O market is again in the midst of change. Since the second half of 2022, it has experienced declining rates, all the while seeing defense and settlement costs materially creep up. The current environment is due to several contributing factors, the first being an influx of new market entrants.
“From 2019 through the first half of 2022, the D&O space went through a hard market cycle,” said Camille Chow, Vice President of Public D&O for Nationwide Management Liability & Specialty. “That, juxtaposed with declining frequency in securities class action suits, precipitated an increase in competition, with new entrants coming in to capitalize on favorable market conditions.”
Ensuing economic conditions and the interest rate environment dampened IPOs and de-SPACs, which constricted the source of available new business in the market. This created a skew in the supply and demand for capacity in the D&O space.
“These new entrants still need to earn their premium somewhere, and without the burden of legacy claims, they have the freedom to compete more aggressively on the mature D&O programs, further driving down premiums,” Chow said.
However, a potential uptick in claims frequency going forward could impact the current trajectory of rate reductions.
To learn more about Nationwide, please visit their website.