U.S. Insurance Market Report 2012: Financial and Professional — Directors and Officers

Highlights from the financial and professional — directors and officers section of the U.S. Insurance Market Report 2012 include:

  • Overall, rates continue to decline for insureds with favorable risk profiles. The pace of decline continues to decelerate with more resistance emerging in rates for primary layers. Underwriters are beginning to take firmer positions on primary pricing, particularly for larger insureds and those with unfavorable risk profiles. Excess rates continue to fall more than primary rates, particularly for programs that are marketed; the pace of decline is slowing in this segment as well.
  • Capacity remains abundant with an “advertised” capacity in excess of $1.5 billion, although most insurers will only use their full capacity in limited situations.
  • Directors and officers (D&O) loss trends are deteriorating and insurer investment returns are low, leading to growing pressure on profitability. The D&O insurance market appears to be in transition; insurers are struggling with the forces of an overall excess of supply and deteriorating profitability, particularly for those insurers with large percentages of primary business.

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