Marsh’s Michael J. White said at Anderson Kill’s D&O Conference that a slowly improving market for directors and officers insurance had created opportunities for coverage enhancements.
The managing director of the broker’s FINPRO unit said prices for premiums overall had declined 1 percent, with Side-A or directors’ coverage rising slightly and policy retentions remaining flat.
“The market is flush with capacity,” said Brad McDonald, senior vice president at JLT Specialty Insurance Services Inc., who joined White on a broker’s panel at last week’s conference.
The capacity has caused carriers to maintain “terms and conditions, while the breadth of coverage is growing,” he said.
New coverage includes reinstatement of limits, especially on Side-A coverage, and more government investigations.
In the active regulatory environment following the financial crisis, White said, clients were demanding enhanced coverage for probes such as those undertaken by the SEC.
Financial institutions were seeing a “broad grant of coverage for investigations for individuals,” he said, while some were also able to obtain coverage of “entities and for informal investigations.”
White urged the audience, including risk managers and others who purchase insurance for companies, to beware of language in policies stating that the entity has to be the target of an investigation for coverage to be triggered.
It used to be that “if an individual wasn’t being investigated for something they did, there was no coverage,” McDonald said. This had been “broadened to include the individual when the company is being investigated.”
Likening the market for financial institutions to a “roller coaster,” White also said that D&O premiums for the sector were currently declining 3.89 percent.
He added that, in general, companies with market capitalizations of $2 billion to $10 billion were seeing the highest increases in premiums.
