The 2012 PLUS D&O Symposium concluded with a roundtable discussion, where brokers and carrier representatives offered their frank opinions on a host of topics confronting the industry. Responding to points made in prior panel discussions and questions posed by the audience, the presenters suggested the following:
- The D&O industry is at an inflection point, where it cannot reasonably expect to add new types of coverage to a D&O policy form without having to charge more for that coverage. As the D&O product itself evolves, pricing will follow.
- Insureds are savvier than they one were, but there is still work to be done in the D&O sector. Particularly with smaller insureds, there is an expectation that any claim will be covered. Brokers and carriers alike need to make it clear to insureds what a policy will cover, and what it will not.
- Conditions are set for the current soft market to turn, and moderate rate increases seem likely within certain market segments, particularly for carriers that write primary and low-level excess coverage. The presenters agreed that increased defense costs for D&O claim, coupled with relatively flat retentions over the past decade, have seriously eroded industry margins. If that information can be shared with insureds, the market is likely to begrudgingly bear modest increases in premium.
- Should premium rise, however, insurers must continue to maintain excellent customer service to retain policyholders. This means that carriers must rededicate themselves to understanding the needs of its clients, offer innovative products that respond to anticipated claim trends, and offer exceptional claims service.
The panelists' remarks suggested a broad consensus within the industry that the market is seeing some hardening, and that the risks that companies wrote in the past -- particularly for private companies -- will need to be repriced as more data about claims becomes available.