D&O Insurance Prices Fall in Q2 for Ninth Straight Quarter: Aon

Directors and officers (D&O) liability insurance pricing has dropped for the ninth-consecutive quarter, with the average cost of $1 million in coverage decreasing by 5.2% in Q2 2024, according to a new report from Aon.

The drop in D&O pricing compared the second quarter of 2023 extends a streak of quarterly price declines that began in late 2017 after four years of steady increases, the report noted.

Aon’s D&O Pricing Index, which tracks pricing changes relative to the base year of 2021, decreased to 1.09 in Q2 2024 from 1.15 in Q2 2023.

For primary policies renewing with the same limit and deductible in Q2 2024, 68% received a price decrease, with an average decrease of 9.7%. 21% renewed “flat”, while 11% received a price increase, with an average increase of 7.2%.

A monthly breakdown for Q2 2024 indicates a softening of D&O pricing.

In April, 69% of primary policies received a price decrease, 14% renewed flat, and 17% received an increase. The average decrease was 6.8%, with an overall change of -3.7%.

May saw 67% of policies with a decrease, 21% flat, and 12% with an increase. The average decrease was 6.7%, the average increase was 10.3%, and the overall change was -3.6%.

In June, 69% of policies received a decrease, 25% were flat, and 6% had an increase. The average decrease in June was 8.6%.

Policy Renewal Trends

In the second quarter of 2024, the majority of primary policies renewed with consistent terms compared to the previous year, Aon reports. Data shows that 96% of primary policies renewed with the same limit, and 90% renewed with the same deductible.

Notably, 86.5% of clients renewed with the same limit and deductible as Q2 2023, marking a return to historical levels after reaching a low point in Q3 2020. This recovery suggests that companies are regaining confidence in their risk management strategies and are comfortable with their current policy terms, according to the report.

Despite movements in limits and deductibles, client loyalty remained high, with 98.6% of primary policies renewing with the same carrier in Q2 2024. On average, primary policies renewing with the same limit, deductible, and carrier experienced a 3.3% premium decrease, providing some relief to policyholders while maintaining stable coverage.

Securities Class Action Filing Activity

In the second quarter of 2024, plaintiffs filed 56 new federal securities class action cases, representing a slight 1% increase from the 55 cases filed in the same quarter of the previous year. While this uptick may seem concerning at first glance, a closer examination of the data reveals a more promising trend, Aon noted.

On a trailing 12-month basis, the projected number of filings for the full year 2024 stands at 210, which represents a 1.4% decrease compared to the 213 filings in 2023. This decline, albeit modest, indicates a reduction in overall risk for companies facing potential securities class action lawsuits.

The stabilization of filings in Q2 2024, coupled with the projected decrease for the full year, suggests that the landscape of securities class action litigation is shifting towards a more favorable environment for businesses.

View the full report on Aon’s website. &