The directors and officers market will continue to be difficult over the course of 2018 as insurers continue to look to premium increases, an expert has said.
John O’Brien, director of broking at Kobe Insurance, said that he expects 2018 to continue to be a difficult market in the D&O space.
“Like the rest of the industry, insurers will look for premium increases and they will look to reduce cover where possible,” O’Brien told Insurance Business. “Have a look at the management liability space, excesses for crime and employment practices liability are on the rise and insurers don’t like providing statutory liability to certain industries.”
O’Brien noted that insurers have already become stricter around risk selection, with a particular mention of management liability, and are “not as keen” to give as high sub-limits as they previously have. Meanwhile certain industries are requiring international approaches.
“Pricing is on the up across the board,” O’Brien said. “I am seeing the market try and harden in line with all other insurer lines. However, it is such as big market that people are still keen to write business. It just depends on the account you need to place. We do some work in the CFD space and that market has become a challenging one and we have had to go direct to London for terms as local markets aren’t too interested.”
Whilst much has been made of the issues surrounding the Side C element of D&O cover, O’Brien noted that the cyber element of a professional lines placement is also important.
In one of the largest and most expensive data breaches in history, US retailer Target saw the credit and debit card details of 40 million shoppers hacked, which the retail giant estimated cost the firm over US$4200m, including a US$18.5m settlement following a lawsuit led by the attorneys general of Connecticut and Illinois.
O’Brien said the Target breach demonstrated for the first time that directors and officers could be held accountable for their failings following a cyber attack, something which could impact the D&O market.
“I think the biggest issues that will be brought against insureds will be resultant of companies not taking the appropriate measures in relation to cyber insurance and also having the correct plans in place once an attack has been made,” O’Brien said.
