D&O premiums tumbling as soft market continues

The average directors and officers liability (D&O) premium fell 11% in the 2007 Q4, far outstripping decreases in other lines of business tracked by Advisen for the Risk and Insurance Management Society’s (RIMS) Benchmark Survey.
In addition, the persistent soft market continued to wear away at pricing in general liability (-3%) and property (1.3%), although the decreases were more modest in these lines, RIMS notes.
“Overall, 2007 was a good year for risk managers, certainly as it relates to the cost of insurance,” said John R. Phelps, member of RIMS board of directors.
“The downward pricing momentum in the fourth quarter, especially in D&O, suggests that the soft market still hasn’t hit bottom,” he added.
“Insurance companies are still posting very strong results and probably will end the year with an underwriting profit,” Advisen’s editor-in-chief David Bradford said in a statement. “That should further stimulate competition and buyers can look forward to yet lower insurance costs.”
But Bradford warned the soft market would eventually take its toll on insurer earnings, maybe starting as early as 2008 Q2.