Early signs of renewed discipline are beginning to surface in the US management liability and D&O market, with brokers seeing a gradual shift away from broad-based rate reductions toward a more selective, risk-driven approach.
Speaking with Insurance Business, Jenny Fraser (pictured), vice president and senior broker at CRC Specialty, said the market is no longer in the “free fall” that defined recent renewal cycles, even as capacity remains abundant and overall conditions continue to favor buyers.
“This year, markets are maybe being a little more targeted in their approach in some areas,” Fraser noted. “Many would like to see more stabilization, especially in public D&O and some of the mid to higher layers in the tower.”
While primary and low excess layers may still see modest decreases or flat renewals, Fraser said the dynamic is changing higher up the program structure.
Insurers are increasingly focused on what they refer to as the “burn layer”: portions of towers that historically attached at higher levels but are now seeing claims severity creep upward.
“A lot of markets feel those layers are underpriced,” she said. “With severity and losses going higher into towers — layers that used to be in excess of $40 million and above — they believe those are still very much in the burn layer. They’re saying, ‘We can’t be giving big discounts. We need more rate.’”
Some carriers are now also actively reviewing underperforming segments of their portfolios. Fraser noted that one market she recently met with was examining the bottom 10% of its book to determine where corrective action was needed, a clear signal that underwriting discipline is returning, albeit selectively.
As discipline returns, differentiation is becoming increasingly granular. Rather than tightening by industry alone, carriers are looking closely at how individual risks have evolved over time.
“In a lot of cases, it’s not so much the industry as the insured,” Fraser said. “Especially where we’ve seen substantial growth over the years.”
She pointed to the tech sector as a prime example, where companies that were once valued at $5 billion may now carry $50 billion market caps without commensurate changes in pricing. Markets are paying attention to that disconnect, said Fraser, with loss history, exposure changes, and balance sheet growth playing a bigger role in underwriting decisions.
Meanwhile, more volatile sectors, such as crypto or crypto-adjacent businesses, remain challenging. Fewer participating markets mean tougher negotiations and, in some cases, firmer stances from carriers unwilling to stretch on price or terms.
Looking ahead six to 12 months, Fraser said carriers’ primary concern is not claim frequency (which remains relatively low) but rising severity.
“Most D&O books are still very profitable,” she said. “But severity continues to go up. We’re seeing large losses go through towers and full-limits losses, and that’s the concern.”
As a result, insurers are increasingly focused on rate adequacy at each attachment point. “They’re asking whether the rate online and ILF really make sense for the exposure they’re taking on,” Fraser continued. “And in some cases, they’re deciding they’re better off walking away.”
While the environment has not suddenly become restrictive, it has become more complex for brokers, who now often need to structure and be creative to achieve client objectives.
“We’re still accomplishing goals on programs… it’s just a little more work and a little more reshuffling,” Fraser said.
“It’s not just us going to the market and saying, ‘We need a 20% decrease’. It’s having to market certain layers, potentially bring on a new MGA willing to participate at the existing rate, or see other carriers drop down because they want more premium.”
