D&O defined by regional dynamics says broker

Businesses leaders across the world have been told they will need to adapt as the risks facing directors and officers continue to change in the face of emerging commercial risks.

Broker Gallagher has issued its D&O market outlook which concluded global markets have experienced varied trends and shifts in 2023 and each region has been challenges with different dynamics.

Those dynamics have been influenced by factors such as pricing disparities, regulatory landscapes, emerging risks, and geopolitical tensions.

In terms of the regional breakdown in Asia some countries witnessed increases of up to 5%, while others experienced decreases of up to 10%.

“Overall, pricing in Asia was slightly down,” it added. “In APAC, Australia’s D&O market experienced increased competition in the latter half of 2023 and insurers vied for opportunities to participate in the insurance programmes of well-managed organisations, leading to stabilisation in D&O premiums.”

In Canada the outlook said the D&O market experienced accelerated rate decreases in the latter half of 2023, laying the groundwork for a more competitive landscape in 2024.

“Many insurers are focusing on client retention while also setting ambitious new business targets and this presents an opportune moment for clients, especially in the publicly traded space, where rate increases were most pronounced during the hard market,” it added.

In Central and Eastern Europe despite the ongoing economic uncertainty in the region and the failure of expected GDP growth in many countries, positive developments are emerging in the D&O market.

Turning to the Nordics, in 2023 intensified competition among insurers was driven by increased D&O capacity provided by both established markets and new MGAs. Reports of declining claims notifications and USA securities class actions, along with stabilising inflation rates, further contributed to a continued positive shift in the market.

In both emerging and established markets across the Middle East, the report said it had witnessed accelerated growth and an increasing sophistication among clients, particularly concerning D&O and management liability.

“This growth can be largely attributed to foreign investment and expat management seeking protection within a legally uncertain landscape,” it added.

Ther outlook said throughout 2023 and into 2024, D&O market conditions have continued to soften in the UK & Western Europe, with the entrance of new capacity and with no notable insurer withdrawals.

Finally in the US, the public company D&O market saw a shift in favour of buyers, marked by the entry of over 30 new insurers, amidst declining IPO activity. This influx led to aggressive pricing strategies and expansive terms offered to insureds.

“As we navigate through the complexities of the global D&O insurance landscape, it is evident that each territory presents its own unique set of challenges and opportunities,” the outlook concluded. “From the competitive dynamics of the Australian market to the regulatory changes shaping the Middle East, the stability of the Canadian market to the evolving risks in the Nordics, each region offers insights into the broader trends shaping the D&O industry.

“As we progress through 2024, it is clear that the global D&O market will continue to be influenced by a multitude of factors, including geopolitical tensions, regulatory changes, technological advancements, and emerging risks.

“Insurers, brokers, and clients are advised to adapt to these evolving dynamics through proactive risk management strategies, innovative underwriting solutions, and strategic partnerships. These will be key in navigating the challenges and seizing the opportunities that lie ahead.”