Directors & Officers Insurance, & Niches

Directors & officers insurance coverage (D&O), along with most other segments of professional liability insurance, continues to be highly competitive, as pointed out in a prior post.  Our conclusion, along with others, is that the professional liability insurance segment is highly competitive with the exception of a few narrow classes such as real estate services.  A new study from Conning & Company (see here & here) concludes that the D&O segment is highly profitable and is a niche focus that insurers can profit from even in this soft market.

 

The study points out the D&O market has grown significantly faster than the rate of growth in the commercial lines segment overall.  Premium increases have resulted from risk management, pricing increases and an increased number of buyers.  The study segments the large, sophisticated buyers of public company D&O from the midsized and small companies which make up the private company and not-for-profit segments of the D&O business.   

At the other end of the market, midsized and smaller accounts present a niche market with substantial growth potential -- even in this soft market. Carefully crafted niche play can provide a profitable outlet for increasing capacity in the D&O line.

As we serve our retail insurance agency clients, we view the business from a transactional perspective.  With a significant number of D&O insurance markets available, intense competition is the current driver in this market.  We view the D&O market as just that, a market; not a niche.  However, there are many highly successful D&O underwriters that take a niche approach within the D&O market.  For each of them, their segmentation of this market has resulted in both growth and underwriting profitability during a soft market.

 

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