The challenges seen from a capacity standpoint, particularly for public companies seeking larger D&O insurance limits, are no longer such an issue. Having been through a hard D&O market, insurers now have aggressive growth targets to hit. However, the lack of IPOs (companies going public on a stock exchange) in 2022, caused largely by geopolitical instability and macroeconomic uncertainty, has led to low volume of newly public companies and premium income that follows them.

This IPO deficit has created a buoyant environment where the new capacity in the market find themselves facing up to increased competition for the existing pool of public companies. The new players in town, without historic claims following them, are suddenly no longer the cheapest.

Insurers are seeing significant price decreases, which is a welcome relief after the last few years of continuous price increases. As with premium, we are also seeing positive changes with respect to retentions and the use of capacity. Many of the legacy carriers in the D&O space were reducing limits over recent years, managing their exposure and reducing the limit losses suffered in the last soft market cycle; but they are now starting to open back up again. Nonetheless, not all buyers are seeing price decreases, with those in certain sectors or with difficult claims not necessarily benefitting from the same degree of positive change. It is also important to note that, as D&O is a long-tail insurance line, maintaining a sustainable approach to underwriting and pricing is key as we move forward. Despite the market softening, it remains a challenging environment for brokers as the majority of deals are being re-marketed due to this increased competition.

Underwriters are being more proactive, as it is no longer solely about pricing. It is about being as efficient and customer-focused to the clients and brokers as possible. A healthier marketplace and increased supply has a positive impact on the overall terms of insurance programmes. Communication between retailers, clients and the market will remain key in order to keep this transition fluid and moving collectively towards a more stable marketplace in 2023 and beyond.