Energy sector sees biggest price rises in UK commercial D&O
Pricing for commercial directors’ and officers’ liability (D&O) insurance placed in the UK increased nearly 130 percent on average in 2020, according to analysis by Marsh Specialty. Prices had increased by an average of over 50 percent in 2019, Marsh said.
Average price rises in 2020 varied significantly by sector, with energy leading the way with rises of around 209 percent, according to Marsh data, ahead of materials on 169 percent and real estate on 163 percent. At the other end of the spectrum, consumer staples prices rose by only 67 percent, while for IT it was 69 percent.
The increases in 2020 accelerated in the second quarter, as the scale and longevity of the COVID-19 pandemic became clear, while the withdrawal of AXA XL from the commercial D&O space in London further exacerbated the trend.
Marsh warned that with more insurers leaving the D&O market in 2020, and uncertainty related to COVID-19 remaining, price rises are likely to continue in 2021, though it also predicted competition to increase.
“The response to the challenging market from both insurers and insureds signals an environment where pricing increases may slow compared to 2020 levels,” Marsh said. It cited insurer price expectations, new entrants to the market and reduced limits among insureds as factors that will mitigate price increases.