Reduction in renewals for commercial D&O: Willis

London market insurers reported an average premium reduction of 8% on renewal business for the commercial sector’s D&O liability over the last three months, according to Willis Group Holdings.
The D&O market is expected to continue softening in the second quarter of 2009, with insurers predicting reductions in excess of 6%, the company said in a release.
In contrast, financial institutions’ D&O rates are hardening.
“Buyers are concerned over the financial security and ratings downgrades for a number of key players in the D&O market,” David Purdy, executive director for Willis FINEX, said in a release. “Further insurer downgrades could lead to capacity problems and we are advising our clients to go to the market earlier at their next renewal and be watchful for attempts by underwriters to reduce coverage.”
The commercial sector continues to benefit from a lower number of claims than in the financial institutions sector, hence the softening commercial rates, according to Julian Martin, executive director of Willis FINEX Global.
According to the Willis D&O Index — a quarterly survey of 90% of D&O insurers from Lloyd’s and the London market — insurers expect to see some impact on the commercial sector from the overall deteriorating economic environment in the medium term.
This is expected to lead to increased claims activity, in addition to portfolio convergence for insurers providing both commercial and financial institution coverage.
For now, it remains a buyers’ market where broad cover and higher limits are still available at an attractive price, according to the report.