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D&O Liability policyholders still see benefits


October 3, 2005   by Canadian Underwriter


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Purchasers of Directors’ & Officers (“D&O”) Liability insurance continue to reap meaningful gains in both premium rates and coverage although these profits are somewhat reduced from earlier this year, according to recent responses to the Willis Index for the third quarter 2005. Recent responses to the Willis Index a quarterly survey of over 90% of Directors’ and Officers’ Liability insurers from non-US companies indicate that deductibles remain generally stable however, there is some upward movement in the size of limits of indemnity purchased.
The Willis Index received views from D&O liability insurers on the past three and next three months and the response revealed that policyholders continue to benefit from a competitive marketplace.
All insurers surveyed said they had experienced a reduction in primary premium rates in the past three months, with 87% expecting rates to reduce in the forthcoming three months. Less premium rate reductions were experienced on an excess basis with 94% of insurers saying that they had experienced reductions over the same period. However 87% of the market predict that there will be a reduction in excess rates over the next three months, although only 69% expect this drop to be greater than 10%.
With regard to deductibles, 91% of the market said they had experienced no change over the past three months. Furthermore, 85% expected this trend to carry on through the third quarter. The trend of insureds reviewing limits purchased on renewals that we reported on in Q1 and Q2, has continued into the third quarter, with 59% of respondents experiencing an increase in the limits of indemnity purchased.
Hurricane Katrina and Rita will not have a direct impact on D&O liability however, it is too early to tell whether these events will cause a general hardening of the market and withdrawal of the capacity levels currently available.


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